Medicinal cannabis firms hoping for lift from a Yes vote in referendum take a share price hit, plus worst week on global markets since pandemic began

Investors hoping a ‘yes’ outcome in the recent cannabis referendum might have had a flow on impact for listed medicinal cannabis stocks had their hopes dashed on Friday after initial results showed the proposal failed to get over the line, but not by much.

Shares of medicinal cannabis companies Cannasouth and Rua Bioscience fell 17 percent and 12 percent respectively on Friday after the result was announced, though Rua shares subsequently recovered somewhat to close down just 3 percent at 66 cents.

However, cannabis reform supporters aren’t throwing in the towel just yet with 480,000 special votes still to be counted.

Green Party spokesperson on drug law reform Chlöe Swarbrick said the vote was always going to be “really close” and she was still hopeful of a positive outcome once the final result is known.

The final count, including special votes, will be released this Friday.

Global markets on edge after experiencing their worst week since March

A nasty trifecta of events last week saw markets experience their worst 5-day trading period since mid-March as investors liquidated positions and headed for the exits.

A dramatic spike in Covid cases in Europe, the UK and the US that has led to further lockdowns, a failure by the US Congress to deliver a much-anticipated stimulus package and increasing nervousness about the fallout from this week’s US presidential election, particularly if Donald Trump loses, had investors turning bearish.

The closely watched volatility index, often referred to as the ‘fear gauge,’ spiked to 40.2 last week, its highest level since early June.

In the US, the S&P500 fell 5.6 percent to 3270 wiping out all its recent gains from a sharp rally in late September.

The NZX50 fell 3.1 percent to 12,084 with market leaders F&P Healthcare and A2 Milk ending the week down 2.4 percent and 4.5 percent, respectively.

Across the Tasman, the ASX200 closed on Friday down 3.9 percent at 5928.

Brent Crude oil futures also ended the week down sharply falling 9.2 percent last week to $US37.94 a barrel, a five-month low, while gold also lost ground declining 1.2 percent to US$1878 an ounce.

The NZ dollar will start the week at 66.14 US cents.

QEX reveals good stolen in Shanghai not covered by insurance

Logistics company QEX has provided a further update on last week’s suspected theft of an estimated $4 million of goods from its bonded warehouse in Shanghai, saying the stolen goods won’t be covered by insurance.

“The board has reviewed QEX’s insurance position, and at this stage does not consider that QEX is able to mitigate its potential losses through any claim under any policy of insurance,” it said in a statement.

QEX reiterated the lost inventory will likely result in it breaching up to three banking covenants.

The company said it has had held “constructive discussions” with its banker. It has been asked to provide a further update on the inventory position and its impact upon the company’s financial position and performance in two weeks.

QEX said it is exploring “exploring all available avenues of legal recourse against third parties in China with a view to mitigating its losses incurred as a consequence of the inventory being misappropriated.”

The stock fell a further 1.8 percent on Friday to 28.5 cents bringing its fall for the week to almost 40 percent.

Tourism Holdings reconfigures its business in response to market conditions

It was a case of good news and bad news for shareholders joining Tourism Holdings AGM on Friday.

Chairman Rob Campbell told shareholders THL is expecting a ‘domestic-only environment’ in 2021, and it was unlikely the company would show a profit in the current financial year or pay a dividend. It expected its greatest loss would be in its New Zealand operations. However, Campbell said the company could make a profit in 2022 provided the border was reopened and international leisure travel rebounded.

The tourism operator said it had been badly impacted by NZ’s closed borders. In response it had aggressively sold down motorhome stock to raise cash and offered steeply discounted offers to domestic tourists who were more price conscious.

Tourism Holdings reported underlying profit of $20 million for the year ended June 30, down 28 percent from $27.9 million the year before. The company cut its wage bill by more than half between April and May, with labour costs dropping from $14.5 million to $6.1 million. Other overhead and operating costs were also cut in the same period, from $17.4 million to $6.5 million.

CEO Grant Webster said debt reduction had also been a key focus of the business.

“From a starting position of $188 million at the end of March, we have now reached approximately $35 million of net debt as at 20 October” he told shareholders.

While the outlook for international tourism wasn’t positive, the company’s US business was performing better than expected. In the US it had four record months this calendar year and had sold more than 750 vehicles from the start of June to the end of September, Webster said.

The company expects it could make a small profit before interest and tax in the US in 2021.

Webster said THL would purchase more vehicles particularly in the US and had committed $100 million of capital expenditure in the second half of 2021.

THL shares closed on Friday unchanged at $2.24.

Europe faces double dip recession

Despite record GDP growth in the third quarter, many parts of Europe now face being tipped straight back into recession as sweeping restrictions aimed at curbing a second wave of coronavirus bring a rapid end to its fragile recovery.

EU gross domestic product surged 12.1 percent between July and September, statistics agency Eurostat said in a statement on Friday. GDP increased 12.7 percent across the 19 countries that use the euro. The expansions, which followed huge declines in the second quarter, were the biggest since 1995.

But the EU economy remains about 4 percent smaller than it was at the end of September last year and analysts say the recovery will be short-lived.

Governments in Germany and France, the region’s two biggest economies, last week announced a second round of nationwide coronavirus lockdowns that will shut non-essential businesses and restaurants for several weeks. Italy has announced a partial lockdown, including shutting bars and restaurants at 6pm, but it could enforce blanket restrictions if the outbreak worsens.

France has already entered its second dip, following a record 18.2 percent surge in third quarter GDP, and prospects for a significant recovery in 2021 are now dwindling.

Germany’s economy grew 8.2 percent between July and September but remains down 4.2 percent compared to the same quarter last year. In Spain, where GDP grew 16.7 percent in the third quarter, the economy is almost 9 percent smaller compared to the same period in 2019. Italy’s economy rebounded 16.1 percent in the third quarter but is down 5 percent from the prior year.

The EU unemployment rate was stable in September at 8.3 percent, according to Eurostat, but analysts cautioned that the labour market is likely to come under increasing strain in the coming months.

Properties in the US west in high demand as wealthy Americans flee Covid infected cities

As Covid weary New Yorkers face the prospect of further lockdowns in the near term, those with the money to do so are fleeing the city in droves where states such as Montana, with its wide-open spaces, smaller population and outdoor attractions, suddenly in hot demand.

Real estate agents say out-of-state bidders who can work remotely are pricing out locals, sometimes buying properties sight unseen, and paying cash. House prices in Western Montana have jumped 17 percent in just the past year.

The West, with its open spaces and stunning mountain landscapes, have always had a romantic appeal for Americans, but in the age of Covid — urbanites imprisoned in high-rise buildings want more than ever to feel free.

Though coronavirus cases are on the rise in Montana, locals point out there’s plenty of room, even if you’re serious about social distancing.

Local agents say those households that can work and educate their kids from just about anywhere, and are not seeking employment, are voting with their feet.

With a population of just over one million, Montana ranks 43rd by population of Americas 50 sates.

UK punters betting big on US election outcome

Americans aren’t the only ones obsessed with this Tuesday’s presidential election outcome.

British bettors are wagering a record amount of money on the result, dwarfing the amount wagered on any sporting event or even their own nation’s politics.

So far more than £220 million, or about US$284 million, had already been wagered on the London-based Betfair Exchange which operates the world’s largest online betting exchange.

While Americans can now legally wager on sporting events in many states, it’s illegal for them to wager on elections, either in the US or even in the UK.

The amount of money already tops the previous record of the £199 million bet on the Trump-Clinton race four years ago. The greatest bet on any UK election was the £113 million on the 2016 Brexit vote.

Betfair is predicting this US election will ultimately top £400 million in bets.

In the presidential race, those taking their chances on President Trump are getting much better odds than the polls. A £10 bet on the incumbent will return a profit of £18.80 if he wins, versus £5.26 on challenger Joe Biden — essentially giving Trump a 35 percent chance of winning.

Still, those are better odds for the president than some US forecasters are giving him. As of Friday morning, the political prediction site had Biden with an 89 percent chance of winning the vote.

Betfair says the winning bet will be who becomes the next president, not who wins the popular vote.

Andrew Patterson is Newsroom's Markets Editor and has worked for decades as a financial journalist, radio presenter and editor with Australia's ABC, Radio Live and NBR.

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