World Health Pandemic  |  Coca Cola Amatil

15 March 2020

Global markets were hit hard overnight, after the World Health Organisation announced that Covid-19 is now a global pandemic, as confirmed cases reached ~120,000, which saw markets erase the gains it made on Tuesday. The US market (S&P500) closed -4.9% lower for the day with all sectors affected, and the market index is now down -19% since reaching all-time highs in February. 

European markets were also weak on the above announcement, as well as releasing weak economic data. The Bank of England announced a surprise 50 basis point cut and a $39 billion stimulus package to provide some support. 

We continue to watch developments as they unfold, and given markets remain very volatile it is far too early to buy in this market, in our view.
 

Stock in Focus: Coca-Cola Amatil  (CCL:ASX)

​​Prior to the coronavirus becoming a global epidemic, Coca-Cola Amatil (CCL) had staged a reasonable recovery, reaching muti-year highs after delivering a strong result for the 2019 financial year.

For 2019, CCL beat the market’s expectations by reporting total revenue from continuing operations of  $5.1 billion,  a solid 6.5% increase from the previous year. This came in ahead of consensus estimates and was driven by solid volume growth in the key Australian market, which had been struggling in recent years thanks to the success of the Coca Cola No Sugar brand.
At the time, management had an upbeat outlook for 2020, expecting mid-single digit earnings per share growth following the completion of its two-year transition period.

We currently have a HOLD rating on CCL
Members should look out for a full update on CCL to be released in our weekly report.
 

 

   
Australia & New Zealand Market Movers

​The Australian market (ASX 200) fell  -3.6% yesterday, erasing Tuesday's gains and is now down just over -20% from February's high". All sectors were hit hard  led by the big 4 Aussie banks, as more intervention from the Reserve Bank to support the government will put more pressure on lenders.
Sydney Airport shares were also lower after releasing weak traffic figures for the month February which was expected, as well as for the first nine days of March, international passenger numbers were down -25% and domestic passenger numbers fell -6%.
 
The NZ market (NZX50) started Wednesday strong as it digested Trump's initial stimulus package announcement, but ended the day marginally lower, resulting in a -10% fall from its February high. The market was led lower by Sky TV, while the retirement village operators Ryman and Summerset fell on investor jitters due to the vulnerability of the elderly, and Auckland International Airport edged lower. The power generators performed well as their dividend yields remained attractive to investors at current valuations.   

 

3 Things Markets Will be Watching this Week

  1. ​​​​​​​Coronavirus related news-flow remains key in terms of driving investor sentiment.
  2. The European Central Bank holds a meeting on Thursday.
  3. Closer to home Aussie business and consumer confidence will be of interest while in NZ we have REINZ house sales on Tuesday.
     

Have a Great Day,
 

Team

Global markets were hit hard overnight, after the World Health Organisation announced that Covid-19 is now a global pandemic, as confirmed cases reached ~120,000, which saw markets erase the gains it made on Tuesday.

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