Summerset retirement village unit sales soar in the latest quarter as older people seek security under the threat of pandemic, plus business confidence strengthens
Summerset Group reports record September quarter
The September quarter was a record for retirement village operator Summerset Group with the company, ironically, attributing Covid-19 for its success – saying residents’ desire for safety and security amid the pandemic was fuelling demand.
Summerset sold a total of 100 new units and resold another 125 during the quarter with the combined total well up from the combined 123 in the June quarter and 141 in the March quarter.
The company was unable to refurbish or sell existing units during the Level 4 lockdown.
Summerset also confirmed it had purchased land to build its ninth retirement village in Auckland.
The 2.8-hectare site is near the Half Moon Bay Marina and the company plans to invest about $300 million in the new village, its first in east Auckland.
Summerset shares closed up 1.6 percent at $9.30 having gained 10 percent in the past three weeks.
Business confidence making tentative gains
Business confidence continues to edge higher, with preliminary ANZ Business Outlook data for October showing steady gains in activity indicators as firms say conditions continue to slowly improve.
Business confidence lifted 14 points to a net minus 15 percent, while businesses own activity lifted 9 points to a net 4 percent reading.
Sharon Zollner, ANZ Bank NZ chief economist, said the results were a dramatic turnaround from the minus 55 percent level in April.
A net 1.4 percent of firms expect to lift investment in the coming year, compared to 0.3 percent in September, while employment intentions improved with a net 3 percent of firms now intending to cut headcount, compared to the 11.8 percent of firms last month.
“Key tests for the economy lie ahead: the winding down of the wage subsidy and the lost summer for tourism,” Zollner said. “But we’re facing into those challenges in much better heart than looked likely a few months ago.”
Wage subsidy saves Warehouse Group from reporting a loss
The Warehouse Group has the Government’s wage subsidy to thank for keeping it in the black. It has confirmed it will not pay a dividend for the 2020 financial year.
The retailer was on the receiving end of a sharp rebuke from Prime Minister Jacinda Ardern earlier in the year for pressing ahead with plans to lay off as many as 750 staff, even after it took the subsidy.
In a brief statement ahead of the planned release of its audited results on October 25, The Warehouse said unaudited net profit was $44.5 million in the 52 weeks ended August 2, down 32 percent on the 2019 financial year. The result included $67.8 million of government wage subsidies, staving off what would have otherwise been a loss of $4.3 million.
“Given the loss prior to the wage subsidy, as well as the continued uncertainty around economic activity and trading outlook, the group directors have decided not to pay a dividend for full-year 2000,” the Warehouse said in a statement.
Warehouse Group shares fell as much as 6 percent to $2.07 following the announcement but recovered later in the day to close unchanged at $2.20.
NZX50 closes at new record high
The New Zealand sharemarket closed at a record high yesterday spurred on by a strong lead from Wall Street after stocks reversed a late sell off the previous day following President Trump’s decision to suspend stimulus talks, a position he later reversed, firing up markets once again.
The NZX 50 gained 220 points, or 1.8 percent, to close at 12,236, a new record and making it the market’s best day in months. Market technicians will also be encouraged at how decisively the index pushed through the 12,000 level, where it had previously struck resistance.
The three main Wall Street indices each closed almost 2 percent higher and Australasian markets followed them.
The Reserve Bank also reaffirmed it was planning to ease monetary policy even further with negative interest rates and a funding-for-lending programme that will fund banks directly, pushing interest rates lower, further underpinning market sentiment.
Vista Group International led the market higher, spiking 9.7 percent to $1.59, while SkyCity Entertainment Group, another stock that has been recovering in recent weeks, climbed 4.7 percent to $3.14.
Shares in Fletcher Building continued their recent strong run finishing the day at $4.35, a 7-month high, as investors anticipate it will be a beneficiary of planned construction activity in 2021 in both commercial and residential sectors.
Women in the US drop out of labour force in record numbers
Hundreds of thousands of women — nearly eight times more than the number of men — dropped out of the US labour force last month, as the pandemic continues to exacerbate inequalities in America’s economy.
Around 617,000 women left the workforce in September alone, compared with just 78,000 men, according to the latest labour force data released this week. And of additional concern, half the women who dropped out were in the prime working age of 35-44.
While the huge number of dropouts also reduced the unemployment rate, the country-wide female jobless rate remained at 8 percent in September while for African American and Hispanic women, the unemployment rates are higher.
Women have been hit harder by this recession than by previous downturns. Industries that employ a significant number of women, such as hospitality and leisure, are faring worse during the pandemic.
New drug treatment for Covid-19 fast tracked for approval
US President Donald Trump has helped to fuel a surge in the stock price of drug maker Regeneron which rose more than 5 percent in pre-market trade Thursday, as it submitted an “emergency use authorisation” (EUA) request to the U.S. Food and Drug Administration (FDA) for its Covid-19 antibody treatment.
Its “REGN-COV2” monoclonal antibody coronavirus therapy is what President Donald Trump took last week after being diagnosed with the coronavirus. He has since described it as a “cure.”
The biotech company published a statement this week noting that “if an EUA is granted, the US government has committed to making these doses available to the American people at no cost and would be responsible for their distribution.”
Currently there are doses available for approximately 50,000 patients, Regeneron said, “and we expect to have doses available for 300,000 patients in total within the next few months.”
REGN-COV2 is a combination of two monoclonal antibodies and was “designed specifically to block infectivity” of the virus that causes Covid-19.
Trump was given an 8-gram dose of the antibody cocktail early in the course of his Covid-19 infection, despite it not having been authorised for use by the FDA.
Airline failures likely to increase in coming months, analysts warn
Strong government support has stopped some airlines from going bankrupt — but more carriers could fail in the coming months, aviation experts warn.
Travel data company, Cirium, found 43 commercial airlines have failed since January this year, compared to 46 in the whole of 2019. A failed airline is one that has completely ceased or suspended operations, according to Cirium’s definition.
Many airlines were already struggling before the pandemic hit, but now analysts say those that have received government help have a better chance at survival than those who have not.
Despite the financial aid, however, the outlook for the rest of 2020 is not encouraging. Analysts point out the first and fourth quarters in the Northern hemisphere are typically the most difficult due to a majority of revenue being generated in the second and third quarters.
The International Air Transport Association (IATA) this week warned that the industry would burn US$77 billion in cash in the second half of 2020 and continue to bleed around US$5 billion or US$6 billion per month in 2021 because of the expected slow recovery.
In July, IATA said passenger traffic was unlikely to return to 2019 levels until 2024 at the earliest.