Jarden Brief: China's plans to launch new stock exchange

China is looking to attract foreign-owned companies. Photo / Getty Images

Keeping you up to date with the latest market moves, in association with Investment firm Jarden

New Zealand:

The S&P NZX50 index traded up 0.9 per cent yesterday as Industrials and Utilities led the way with gains of 2.4 and 1.9 per cent respectively.

The utilities sector was buoyed by generation-retailor Mercury NZ Limited which advanced 4.8 per cent on the back of announcing a new general manager of sustainability Lucie Drummond. In second place on the single stock podium was electronic payment provider Pushpay Holdings limited which climbed 4.0 per cent.

In contrast, sector losses included Energy and Technology which fell 1.1 and 0.7 per cent respectively.

The two largest downward movers included banking group Heartland Bank Holdings Limited which slumped to a 2.2 per cent loss along with retailer Kathmandu Holdings Limited, also down 2.2 per cent.

Former construction company Mainzeal was in the press yesterday after the Court of Appeal ruled on the liability of directors leading to the company's liquidation in 2013. The former directors, including ex-prime minister Dame Jenny Shipley, appealed the decision that found them liable for reckless trading which contributed to the company's downfall. This appeal was overruled by the court and the original ruling remains.

Furthermore, the court also ruled that the directors and CEO had breached the Companies Act (1993), finding that they should not have entered four significant contracts after the events of January 2011. These new developments will likely lead to significant financial penalties for the directors and CEO, the exact amount is yet to be confirmed.

In other news, the Reserve Bank of New Zealand (RBNZ) lowered dividend restrictions on the country's major banks yesterday. In the aftermath of COVID-19, the Reserve Bank banned banks from paying out any dividends to shareholders as a safeguard for financial stability. The ban has been in place since April 2020 but was lifted yesterday and bank's can now pay out 50 per cent of earnings in dividends.

INTERNATIONAL MARKETS:
US:

Right ahead of Biden announcing his infrastructure plan the big US indices were all in the green. The S&P500 hit a new 52 week high, increasing 0.9 per cent, DJIA was up 0.2 per cent and the NASDAQ rose 2.0 per cent.

The positive sentiment was led by Technology, increasing 2.0 per cent and Consumer Discretionary, up 1.3 per cent. Energy and Financials were showing the biggest losses, decreasing 0.6 and 0.4 per cent, respectively.

At the time of writing, the top gainer was microinverter systems producer Enphase Energy, increasing 7.4 per cent to US$161.70. This was followed by semiconductor equipment maker Applied Materials hitting a new 52 week high, up 5.6 per cent to US$133.88. Clothing company PVH Corp, who owns brands like Tommy Hilfiger and Calvin Klein, was up 5.3 per cent to US$105.38.

Going through a very volatile period due to the major sell-off involving Archegos Capital Management, mentioned in yesterday's brief, ViacomCBS was the worst performer, decreasing 5.1 per cent to US$44.32. Rounding off the worst performers were food manufacturer and processor Kroger Co, down 4 per cent to US$36.57, and aggregate products supplier Martin Marietta Materials, decreasing 2.7 per cent to US$334.22.

Joe Biden's infrastructure plan is meant to be officially revealed soon, with an estimated US$2 trillion to be spent on roads and bridges, as well as climate change measures and elder care. However, such a package needs to be paid and it is said to involve a corporate tax increase to 28 per cent from 21 per cent.

Online education platform Coursera made a spectacular start on the New York Stock Exchange. Fuelled by the increase in demand for remote learning around the globe, the opening price of US$39 was 18 per cent higher than its IPO price of US$33.

Rest of the world:

The Asian indices were all trading down, at the time of writing. The Shanghai Composite decreased by 0.4 per cent, the Nikkei was down 0.9 per cent and the Hangseng declined 0.7 per cent.

It is said that China is in early talks about establishing a stock exchange to attract overseas-listed firms. This might involve upgrading an existing smaller bourse in Beijing. The conversation was started due to existing rivalry between the US and China, and the US securities regulator pressuring Chinese companies to comply with US auditing standards.

COVID cases are on the rise again overseas, with France potentially facing another lockdown. The German government is stressing that due to the mutations in the virus, the new increase in cases should be view as caused by a "new" virus and therefore strict measures need to be implemented to curb the curve.

Commodities

It was a turbulent session for precious metals. Gold was up 1.5 per cent to US$1710.10. Oil decreased 1.8 per cent to US$59.43.

It has been a relatively quiet session for cryptocurrencies, with Bitcoin increasing 0.5 per cent and Ethereum rising 0.3 per cent.
The US 10-year bond yield stayed unchanged at its 52 week high of 1.73 per cent.

Australian Markets:

ASX200 finished yesterday's session, and the last day of the financial quarter, 0.8 per cent higher. This brings the index up to a new 20-day high.

In a turnaround from Tuesday, all 11 sectors rose. The most-improved sector of the day was Industrials, which rose 2.2 per cent. A-REIT and Consumer Staples were also top performing sectors, rising 1.3 and 1.2 per cent, respectively.

Unibail-Radamco-Westfield, a global developer, was the best performer yesterday, up 6.4 per cent. Champion Iron Limited was bolstered with rising iron ore prices coming in at a close second on the performers podium, rising 6.2 per cent. Toll road asset company, Atlas Arteria, was the third best performing stock, up 5.7 per cent.

Harvey Norman Holdings fell the most, down 3.7 per cent. Other underperformers were gold company, Ramelius Resources, down 3.7 per cent, mirroring falling gold commodity prices, and linguistics service provider, Appen, down 3.6 per cent.

Zip Co and JB Hi-Fi will launch a partnership this month with Zip providing a fully integrated payments solution for JB Hi-Fi. This will allow customers in Australia to buy now and pay later with Afterpay without incurring interest or fees. JB Hi-Fi rose a modest 0.1 per cent yesterday.

Yesterday, Brisbane's outbreak of Covid-19 case numbers grew by just two. It will be announced today whether the lockdown will continue. This comes as Australia has fallen 3.4 million shots short of its Covid-19 vaccination programme target to deliver 4 million doses by March 31. This is disappointing news for Australia's Covid-19 recovery and for investors.

• For more information on the latest market moves, get in touch with Jarden.

Disclaimer: This Morning Brief has been prepared in good faith and reflects opinions and views at the time of publication, using external sources, systems and other data and information we believe to be accurate, complete and reliable at the time of preparation. We make no representation or warranty as to the accuracy, correctness and completeness of that information, and will not be liable or responsible for any error or omission. This Morning Brief is not to be relied upon as a basis for making any investment decision. Please seek specific investment advice before making any investment decision. Jarden Securities Limited is an NZX Firm, a broker disclosure statement is available free of charge at www.jarden.co.nz. Jarden is not a registered bank in New Zealand. Full disclaimer available at: https://www.jarden.co.nz/limitations-and-disclaimer