Global markets were slightly lower on Friday though shares on Wall Street still closed the week higher on hopes for lower US interest rates and the prospect of at least a truce in the US-China trade dispute.
The key event for the week ahead is the G20 leaders meeting in Japan set for Friday & Saturday, with all eyes on talks between presidents Donald Trump and Xi Jinping. Investors remain hopeful upcoming trade talks between Washington and Beijing will progress. At the same time, rising tensions between the US and Iran are working to keep investors on edge.
Stock in Focus: SkyCity Entertainment (SKC:NZX / SKC:ASX)
Despite a strong start to the year, SkyCity shares have been under pressure, largely due to an earnings downgrade as trading conditions in the second half appear to be less upbeat than previously anticipated.
SKC expects its normalised operating earnings for the 2019 financial year to be flat on last year, as opposed to up slightly or ‘modest’ growth guidance announced during their 2019 first half result. SKC shares have also been weighed down by negative sentiment surrounding the industry with a weaker outlook across the tourism sector as well as a weak trading update from Australian casino operator Star Entertainment.
Following the sale of its Darwin property and Hobson street carpark, SKC have received regulatory consent to purchase a 1.01 hectare site in Queenstown which is plans to develop into a 5-star hotel to cater for strong international demand as the area struggles with hotel bed shortage. Further, SKC have announced they are looking to enter the online gambling arena.
We continue to believe SKC shares are attractively priced in a relatively expensive market.
We currently have a BUY recommendation on SkyCity.
Australia & New Zealand Market Movers
The Australian share market was lower on Friday (ASX 200 index -0.55%) but remains within striking distance of an all-time high reached at the peak of the mining boom in 2007.
The New Zealand market added to gains on Friday (NZX 50 index +0.35% as investors adjusted for the reweighting of several major indices. Utilities and property companies offering reliable dividends remained in vogue. In stock news, New Zealand King Salmon said it expects flat earnings for the 2020 financial year. The fish farmer is lifting its capital spending programme in an effort to mitigate the higher death rates caused by warmer waters.
3 Things Markets Will be Watching this Week
- The G20 Meeting takes place on Friday & Saturday.
- The Reserve Bank of New Zealand makes an interest rate decision on Wednesday.
- There is an OPEC meeting on Tuesday.
Have a Great Day,