Business & Investing: Companies that benefit from Trans-Tasman travel gained on the sharemarket after the bubble was announced, Plus the second major cryptocurrency enjoys a boom
Travel and tourism stocks spiked higher yesterday after the long-awaited travel bubble with Australia was finally confirmed by the Government.
With the new bubble set to open in two weeks, Air New Zealand said it was already seeing strong demand from customers keen to visit friends and family on both sides of the Tasman.
Air New Zealand shares closed up 5.8 percent at $1.82, while Tourism Holdings, which will also benefit from the resumption of two-way travel, also saw its shares jump 5.8 percent to $2.72.
Auckland International Airport shares traded as high as $7.87 intraday before closing up 1.3 percent at $7.75.
Shares in SkyCity Entertainment, which has hotels in both Auckland and Queenstown, closed unchanged at $3.42.
Renewable stocks slide following reweighting of S&P clean energy index
Renewable electricity stocks fell sharply yesterday in response to a new version of a clean energy index, announced on Good Friday, that will see a reduction in the weighting of Meridian and Contact.
Meridian Energy shares shed almost 6 percent to $5.25, while Contact Energy fell 4.1 percent to $6.79. Both companies are included in S&P’s Global Clean Energy Index which was responsible for a strong run up in their share prices in January as the fund acquired the shares at highly inflated prices.
A total of 70 new companies have since been added to the index significantly reducing the weighting of both stocks.
Following the resumption of trading yesterday after the Easter break investors reacted to the Good Friday announcement and began selling the two stocks ahead of the rebalance.
Mercury NZ shares also closed down 3.9 percent to $6.25, though it is not included in the GCE index.
Kiwi Property Group and Tainui Group Holdings announce new Hamilton joint venture
Shares in Kiwi Property Group climbed 0.4 percent yesterday to $1.235 after announcing it had joined Tainui Group Holdings (TGH) to form a second joint venture to develop a central Hamilton shopping centre into a mixed-use retail, office, and potentially residential precinct.
A new 100-year ground lease will be granted by TGH, with rent pre-paid.
Kiwi Property CEO Clive Mackenzie said he was looking forward to building on the strong partnership with TGH, which had been established when Kiwi Property acquired a 50 percent share of The Base shopping centre in 2016.
“With its pivotal location in the Hamilton CBD, Centre Place North has the potential to bring together an attractive offering.”
TGH CEO Chris Joblin said Centre Place North would play an important role in the rejuvenation of Hamilton’s city centre which will be based on a “100-year view and some visionary thinking to create something vibrant and special.”
Retail sales lift in March but retailers warn of price increases to come
March saw a strong lift in retail spending compared to the same month last year according to the latest Retail NZ Sales Index released yesterday.
It showed that average sales per site were almost 30 percent ahead of last year, though the comparisons are distorted by last year’s Level 4 lockdown which saw the near total cessation of retail spending in the last week of March 2020.
However, Retail NZ said the strong headline result for last month masked an uneven level of spending across the sector. It said while some businesses recorded strong results, there continued to be a significant number of retailers who remained under pressure.
Of particular concern is the fact that 65 percent of members surveyed said ongoing supply chain issues, as well as rising overhead costs, including wages and freight in particular, were likely to put upwards pressure on retail prices over the next three months.
Sky Television renews multi-year content deal with NBC Universal
Sky Network Television has announced the signing of a multi-year deal extending its arrangements with NBC Universal covering movies, drama, comedy, reality and news.
Details of the financial terms of the deal or how many years it covered were not disclosed.
In addition to existing channels E! and the business news network CNBC, the new deal will include Universal TV, a channel which is dedicated to crime and drama content.
Sky chief executive Sophie Moloney said the deal would strengthen the depth and breadth of Sky’s existing offering.
Sky Television shares closed up 1.1 percent at 18c.
Cryptocurrency market doubles again in value in less than two months
The value of the cryptocurrency market topped US$2 trillion for the first time on Monday, driven by a rally in Ether, the second-largest digital coin.
After hitting $1 trillion in January, the market capitalisation of the cryptocurrency market has again doubled, according to price tracking website CoinGecko.
Bitcoin, the biggest digital currency, accounts for over 50 percent of the entire cryptocurrency market capitalisation. It has rallied over 100 percent this year alone, helping to propel the cryptocurrency market higher.
But the latest boost in the crypto market appears to have been driven by Ether, the digital coin that powers the Ethereum blockchain.
Unlike Bitcoin, the Ethereum blockchain operates more like a software platform that allows developers to build apps on top of it. Users can then spend Ether on these apps.
There is growing interest in Ethereum being used in so-called decentralised finance, or DeFi, applications. These are blockchain-based financial services, such as lending, which could in theory bypass banks and brokerages completely. Users of these apps may transact using cryptocurrency.
Ethereum also has the underlying technology behind the recent craze in non-fungible tokens, or NFTs — a new type of digital asset.
NFTs have been an investing and pop culture mania for the past few weeks, leading some to wonder if the frenzy is a market bubble fuelled by the wealthy and younger traders flush with stimulus money.
Ether hit an all-time high of US$2,151 yesterday. It is now up over 180 percent year-to-date.
Credit Suisse counts the cost of hedge fund collapse
The collapse last month of US hedge fund Archegos Capital has been costly for investment banking giant Credit Suisse and resulted in the resignation of two of its senior executives.
The Swiss bank said yesterday it was likely to report a pre-tax loss of 900 million Swiss francs (NZ$1.4 billion) for the first quarter of this year after taking a charge of 4.4 billion Swiss francs (NZ$6.7 billion) in respect of the failure of Archegos.
“The significant loss … relating to the failure of a US-based hedge fund is unacceptable,” CEO Thomas Gottstein said in a statement. “Serious lessons will be learned from this.”
Credit Suisse said that its top investment banker and chief risk officer would both leave the bank. Other members of the executive board would not receive bonuses for 2020, while the bank’s chairman would give up more than NZ$2 million in compensation and benefits.
Credit Suisse also said it would slash its dividend and suspend share buybacks.
Archegos used borrowed money to build massive positions in stocks, including media companies, and was unable to pay back lenders when share prices dropped.
