Business & Investing: The big winners and losers on the stockmarket since the March 2020 low, Plus: Energy stocks slump after Dow Jones changes index

Today marks the one-year anniversary since the Covid-19 market bottom on March 23 last year when the NZX50 hit a low of 8,499 after tumbling almost 30 percent in less than four weeks.

As New Zealand went into lockdown and commentators were predicting one of the sharpest contractions on record, fear was all-consuming.

But investors who followed legendary US investor Warren Buffett’s advice and were “greedy when others were fearful” have been handsomely rewarded a year later – provided they picked the right stocks.

A few notable examples include…

Tourism Holdings – Then 0.55 / Now $2.60 (+470 percent)

Summerset Group – Then 3.71 / Now $12.74 (+245 percent)

Mainfreight – Then $25.10 / Now $66.56 (+165 percent)

Ryman Healthcare – Then $6.64 / Now $15.69 (+135 percent)

Fletcher Building – Then $3.15 / Now $6.75 (+115 percent)

Auckland International Airport – Then $4.63 / Now $7.55 (+63 percent)

On the flip side, stocks trading below their March 2020 low include

A2 Milk – Then $15.94 / Now $9.06 (-43 percent)

Refining NZ – Then 0.64 / Now 0.47 (-25 percent)

Synlait Milk – Then 4.90 / Now $3.73 (-24 percent)

The NZX50 index, though off its most recent highs, is still up 45 percent from its March 2020 low.

The sell-off remains one of the fastest market declines ever and one of the shortest bear markets on record lasting a mere few weeks.

Energy stocks slump following index reweighting

Renewable energy stocks fell sharply yesterday following a Dow Jones review of a clean energy index.

Meridian Energy shares slumped 6.3 percent to $5.25, with approximately 4 million shares, worth more than $25m, changing hands.

Contact Energy shares fell 4.5 percent to $6.75, while Mercury NZ declined 5.3 percent to $6.20 after last week acquiring additional wind farms from Tilt Renewables

Dow Jones is reviewing a clean energy index that includes Contact and Meridian, after it experienced a liquidity shock in January that resulted in sky high share price increases.

The latest consultation document proposes changing the criteria to add 70 stocks to the existing 30 in the index.

Consumers remain wary about economic outlook despite positive signs

Despite being Covid-free and enjoying some of the most extensive freedoms in the world right now, consumers remain wary about the state of the economy over the coming year, although they’re cautiously optimistic about their own back pockets, according to the latest Westpac McDermott Miller survey.

The headline consumer confidence index dipped 0.8 of a point to 105.2 in the March quarter, remaining well below its long-run average of 109.9.

Westpac said the result isn’t surprising given the survey took place when Covid restrictions were in place, which will have “dampened some households’ spirits, especially in Auckland and in traditional tourism hotspots”.

But it’s not all doom and gloom. While a net 1.6 percent of the 1,557 respondents expect economic conditions to get worse over the coming 12 months, around 15 percent anticipate their own financial situation will improve.

The survey found younger people are the most pessimistic about the future, which Westpac economist Michael Gordon said was probably because they’re feeling less likely to own a home and have been increasingly locked out of buying property as prices remain out of their reach.

Air freight lifeline extended to the end of October

The Government has extended financial support to the aviation sector through to the end of October to help keep New Zealand connected with trade partners and maintain international passenger services, Transport Minister Michael Wood announced yesterday.

“Airfreight capacity is at 90 per cent of pre-COVID levels thanks to the International Airfreight Capacity (IAFC) scheme, which has meant our exporters have been able to get their products to market and time-critical goods such as medicines have been able to come into New Zealand.”

Wood pointed out that more than 60,000 people had returned to New Zealand on flights supported by the scheme – 60 percent of the total number of people to pass through MIQ facilities.

“It’s unlikely those journeys or the freight moved would have been possible without support from the IAFC scheme.”

From now, the support programme is to be renamed the ‘Maintaining International Air Connectivity’ (MIAC) scheme and it allows for support levels to reduce as passenger numbers rise.

Wood said officials continued to work closely with airlines and carriers and were monitoring the international aviation market. The Government would consider extending support until the end of March 2022 if necessary.

In March 2020, Government set aside $600 million for an aviation relief package as part of the $12.1 billion Covid-19 support package. From this, $372 million was allocated to support airfreight connectivity for the original IAFC scheme.

Serko reports positive transaction volumes in March

In a trading update yesterday, online travel booking and expense management company Serko said transaction volumes had recently shown a positive uplift.

“During March, we have seen transaction volumes increase, with transactions month-to-date averaging 68 percent of the volumes recorded for the same period in March 2019 which were unaffected by Covid-19,” said chief executive Darrin Grafton.

The company said using the March 2019 figure was a more meaningful indication than March last year when the Covid crisis erupted, leading to mostly closed borders.

“As previously announced, Serko has assumed in its forecasts that travel volumes will be transacting in the range of 30 percent to 70 percent by March 2021, so we are pleased to see transactions currently tracking to the higher end of this range,” Grafton said.

Grafton also noted the company was seeing daily transaction volumes reaching their highest rate since Covid started materially impacting Serko’s travel volumes in mid-March 2020.

Nevertheless, ongoing Covid-related travel restrictions have meant volatile volumes ranging from 58 percent of year-earlier volumes in December to 40 percent for January and 51 percent for February.

Serko shares closed up 4.8 percent yesterday at $6.37.

Shares in Australia’s Crown Resorts surge following unsolicited takeover offer

Troubled Australian casino giant Crown Resorts, which was at the centre of a scathing judicial report a month ago, is now the subject of a takeover bid from the giant US private equity group Blackstone.

The James Packer-backed group confirmed yesterday it received the unsolicited, non-binding and indicative proposal from Blackstone on Sunday worth A$11.85 per share, valuing Crown at A$8 billion.

Crown’s shares closed at A$9.86 on Friday and jumped 19 per cent to A$11.75 when the ASX opened yesterday, the highest they have traded since February last year.

In a statement to the ASX, the company said it had not yet formed a view on the merits of the proposal.

The takeover offer – which is a 19 percent premium to Crown’s average share price since February 18 – comes as the company continues to deal with the fallout from the recent Bergin Inquiry.

That 18-month probe, conducted by former Supreme Court judge Patricia Bergin, ruled Crown unfit to hold the licence for its new $2.2 billion casino at Sydney’s Barangaroo after confirming reports in The Age and The Sydney Morning Herald that it had facilitated money laundering and allowed criminals to infiltrate its Melbourne and Perth casinos.

The Victoria and Western Australia state governments have subsequently launched royal commissions to examine whether Crown should keep its casino licences in those states.

Record inflows to funds as investor mood begins to brighten

US investors have poured almost US$170bn into equity funds over the past month in the latest sign of how the brightening economic outlook and relentless stimulus measures have provided a sustained boost for stocks.

The surge last week, which was the most pronounced in US stocks, came as the US government began distributing the stimulus payments that were part of Joe Biden’s US$1.9tn relief package.

Last week’s rush of inflows also came after the Federal Reserve lifted its outlook for the world’s biggest economy and said it expected to hold interest rates at historically-low levels until at least 2024.

Bank of America analysts described the current situation as being “in the midst of [the] strongest macro data of our lives,” referring to economic indicators that showed the US and China economies were recovering rapidly from the pandemic.

The brightening outlook lifted the blue-chip S&P 500 to a record high last Wednesday, the day of the rate decision, though investors remain nervous about rising bond yields and a potential fuelling of a boom in inflation.

Turkey’s lira plunges in the wake of central bank governor’s sacking

Turkey’s lira plunged against the US dollar yesterday, deepening the country’s current economic crisis after President Recep Tayyip Erdogan abruptly fired the head of Turkey’s central bank over the weekend.

The lira was trading yesterday at around 8.12 per US dollar, weakening almost 14 percent since Friday.

The curreny’s fall came after Erdogan dismissed Turkish central bank governor Naci Agbal by way of presidential decree. Agbal had served less than four months on the job. He was replaced by Sahap Kavcioglu, a banking academic and former parliamentarian.

There is growing speculation the firing of the central bank chief may deal a big blow to investor confidence in Turkey.

In Agbal’s short time in the role he defended the bank’s economic reforms and independence. But his undoing was almost certainly hiking interest rates by 200 basis points to 19 percent, higher than expected, last week.

By delivering that “hawkish surprise,” Agbal’s “days were immediately numbered as he found himself on the receiving end of President Erdogan’s ire” wrote one Turkish commentator.

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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