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Nzx50

NZX to end 2022 with strong headwindsNew Zealand's stock exchange (NZX) could be facing strong headwinds toward the end of 2022 as third-quarter inflation figures suggest an 75-basis-points hike in the central bank's Official Cash Rate (OCR) in November. In anticipation of the Reserve Bank rate decision earlier in October, the S&P/NZX 50 fell 106.3 points or -1% to 10,959.71. A similar scenario could happen again in the lead up to the November rate decision. While the index, indeed, recovered following the announcement of the third-quarter inflation figures for the country, it was largely due to strong overnight rally in the US. However, It did not entirely dissipate concerns that a further interest rate hike is fast approaching, potentially adding uncertainty to an already volatile market. NZX's reaction to rate decisions and inflation figures Following the announcement of the third-quarter consumer price index for New Zealand, the S&P/NZX 50 index rose 61.4 points or +0.57% to 10,847.34. The strong overnight rally in the US helped offset the reveal of a marginal decline in inflation figure to 7.2% from 7.3%. The index fell 55.8 points, or -0.51%, to 10,817.23 in the lead up to the announcement of the inflation figure, proving that if not for the strong overnight rally, closing results for the index would have been very different as a still-high inflation number was expected to dampen sentiment and market activity. The inflation data has elicited expectations for a 75-basis-point hike in the official cash rate when the Reserve Bank of New Zealand makes it monetary policy decision in November. A hike above 50-basis-points is all but guaranteed. "If interest rates move higher, stock investors become more reluctant to bid up stock prices because the value of future earnings will look less attractive versus bonds that pay more competitive yields today," explained Rob Haworth, senior investment strategy director at U.S. Bank Wealth Management. "If higher rates are anticipated in the future, the present value of future earnings for stocks are reduced. If this occurs, it may put more pressure on stock prices," he added. Most sectors emerge as losers when interest rates are increased, except for some exceptions such as the financial sector. As such, the Finance is the NZX’s leading sector for the previous 3 months, racking up gains of +11.34%. Only three other sectors are in positive territory for this time period; Consumer No-Durables (+6.97%), Transportation (+2.74%) and Communications (+1.39%). What awaits the NZX? The further rate hike to 4.25% as almost a certainty at this point. At least two Reserve Bank committee members already expressed they are in favor of a 75-point rate increase. ASB Bank analysts are even expecting the upcoming rate hike to be followed by two more 50-point increases early in 2023 for an expected official cash rate peak 5.25%. Economists from the Australia and New Zealand Banking Group are joining the consensus for the rate hike in November and adds that a similar decision is anticipated in February 2023. "Both hikes are contingent on global financial markets keeping it together," said ANZ economist Finn Robinson and chief economist Sharon Zollner.
TVC:NZ50G
by BlackBull_Markets
Pushpay declines on rumoursPushpay (-10.6%), the church management software company plunged to $1.10 after rumors surfaced that its buyout would not be progressing. Pushpay would not confirm or deny the rumor, although noted that they were aware of the market speculation and were abiding by its NZX continuous disclosure obligation. A cooperative bid from BGH Capital and Sixth Street Partners for Pushpay was fielded in May, but no definitive agreement was struck. The bid for Pushpay came at a time when the company reported that it had made significant progress on its growth strategy, with its full year revenue increasing from $249m to $322m However, PPH has been unable to retain a share price close to its May high of $1.50, and the non-binding bid may be renegotiated lower before a buyout can progress.
P
by BlackBull_Markets
Will the NZX have a positive 2022?Like many stock exchanges globally, the New Zealand stock exchange continues to emerge from the COVID-19 pandemic-induced trough of 2020, although volatility remains as the pandemic drags on and as markets face new challenges such as the ongoing geopolitical tensions in Europe. NZX had a lackluster year in 2021 The NZX 50 ended 2021 flat at 13,033.77, marginally down from 13,091.64 at the end of 2020 after nine consecutive years of growth. The capital market’s lackluster performance came as the New Zealand economy grew at a weaker-than-expected pace in 2021. Data from the NZX (NZE:NZX) showed that the total value of stocks traded last year fell 2.4% year over year to NZ$52.4 billion, significantly weaker than the 41.8% jump in 2020. Still attractive for IPOs However, the NZX remained appealing for initial public offerings and secondary listings in 2021, with the value of new capital listed and raised rising 12.1% to $19.8 billion. The bourse hosted the IPOs of nine new companies last year. In 2020, total capital raised from IPOs fell 5.5% to NZ$17.6 billion, with only eight new additions to the NZX. Last year, local meal kit home delivery service platform My Food Bag (NZE:MFB) launched the biggest IPO in the country in seven years, raising NZ$342 million and valuing the company at close to NZ$450 million. NZX, in its annual report, attributed the increase in the number of first-time listers last year to some changes that it carried out including reducing the complexity and costs of IPO applications. This year, New Zealand’s IPO pipeline is not looking as rosy as last year with no major rumors of a potential listing. Globally, the lingering pandemic and geopolitical shocks are expected to weigh on investor appetite for new listings, according to PwC’s 2022 outlook. However, the accounting firm noted that "optimism remains high that vaccines and other mitigation strategies can prevent widespread lockdowns, keeping equity markets steady and maintaining the environment many prospective companies seek when going public.” Higher volatility looms for 2022 Investors will have to buckle up for a wild ride this year as markets emerge from post-pandemic recovery and as central banks tighten their monetary policies in response to higher inflation. At home, the Reserve Bank of New Zealand expects the official cash rate to climb 2.5% in the next 12 months before peaking at 3.25% at 2023-end. Best stocks for NZX’s growth Despite market challenges, the NZX is poised to benefit from the strong performance of some high-performing stocks with stellar balance sheets, high profitability, and strong free cash flow generation. SKY Network Television (NZE:SKT) is among the best performers on the NZX. The stock bounced strongly in the first quarter of 2022, surging 56% over the past year as of Wednesday. The broadcast company recorded better-than-expected earnings in the six months ended Dec. 31, driven by strong customer growth after the company offered promotions during COVID-19 lockdowns. Steel Tube (NZSE:STU) is another growth driver for the NZX as the company cashed in on higher steel prices despite supply chain pressures, with its recent half-year profit tripling. EBOS Group (NZE:EBO), whose shares surged to an all-time high in January, is also off to a good year as the healthcare company posted another record first half recently owing to its diversified portfolio of healthcare and animal care products. The NZX may also see a boost from other high-performing stocks including fuel distributor Z Energy (NZE:ZEL), logistics firm Mainfreight (NZE:MFT), utilities firm Contact Energy (NZE:CEN) and renewable energy company Infratil (NZE:IFT).
TVC:NZ50G
by BlackBull_Markets
NZME profit taking opportunityThanks for viewing, I am not sure if this is of wide appeal. NZME is a media Company that caught my attention last year due to the share price declines having appeared to have out-paced any revenue declines in an industry in a global slow down-trend. I was eyeing the equity at the 0.40 level at the start of the year but felt there was still another leg down - just based on Elliot Wave. New Zealand has done an exceptional job of controlling the health crisis, and gained a lot of notoriety, but is in a wait-and-see position now as the rest of the world are facing some rather serious looking health and debt issues. There is also the question of opening up the economy to travel again, no idea when that can happen - although I view NZME as somewhat insulated from these issues. In march 2020 NZME was down over 82% from its post IPO 2017 highs and got as low as $0.18 a share. Due to the big price drops it had a rather juicy looking potential dividend, should dividends remain at or close to 2019 levels. However, NZME had already suspended its dividends due to a very high debt level. But I still saw a bounce potential, as media Companies are generally thought to be 'recession resistant' due to Companies normally increasing marketing budgets in a recession. I am getting the impression that this has not eventuated in this case, as everyone is just in survival mode. Anyway, despite a 13% drop in revenue in the first half of 2020, net profit was up, and they posted a very strong reduction in their debt position - hence the bounce. Expectations; after such a long and deep price collapse I do not expect NZME to set heading for higher highs. A base needs to be formed. So I see a 3 wave A that is coming to and end, and will be followed by a price decline and a re-test of the March lows (even though I don't expect a lower low I have decided to take profit). After the low re-test, we can consider the chance of a proper retracement up to the $0.70 level, for example. Despite some good news NZME has some big problems like; - A significant majority of their assets are "intangible assets" from their newspaper and radio brand acquisitions, so if there are significant write-downs in these assets that could materially affect the balance sheet. Considering that when these assets were acquired, the world was a much different, and likely more optimistic place - it may well eventuate that the purchase prices don't make a lot of sense in today's context. That is just my feeling, based on the vulnerability of this organisation to such a scenario. -General down-drafts in the newspaper and radio sectors, despite their investments in streaming and online delivery there are still big challenges. - There doesn't actually need to be bad news from NZME for the price to decline now. I am expecting a more generalised draw-down of global equities. If that view holds, NZME may well be caught in the trend regardless of how well they are doing, as people unlock untapped collateral. I expect NZME to return to paying dividends either in late 2020, or in 2021, and that will help. I see rather strong technical reasons to sell lining up; - The 1:1 extension of the June 2020 high (of $0.35 )( has been exceeded - at $0.46. Wave A often does a 1:1 of the first wave (April to May) up. - There is rather strong bearish RSI divergence forming - when higher highs in price are displayed as lower highs in the RSI. I pay attention to this especially when the RSI is already "overbought" i.e. above 70 and is pushed below 70 while the price is making higher highs. An RSI divergence often precedes turning-points in charts. - On the 17th and 18th of September, the 0.382 Fibonacci retracement level (of the full price decline from 2017 levels) showed strong resistance. - MACD histogram is trending downwards. - The MACD moving averages seem to be thinking about crossing-over to the downside. - I am already up 80%, in a very short time-frame, so I don't want to be too greedy and end up losing some or all of my gains. If it goes a lot higher after I sell tomorrow (market sell half on market open and limit sell the rest at $0.51) I will be able to live with it (I can see $0.51 as a short-term possibility based on the 1.618 extension of the 28th Aug to 7th Sept price rise). I hope I am not being too pessimistic in my outlook. But I see a few reasons that "line up" without much technical or fundamental causes for too much bullishness. I hope you appreciate how transparent I am being. This really isn't a big money position, despite my conviction in entering the position, I ended up allocating far more to poorly performing equities. In fact, the worse performing, the more I allocated. Overall, this is the second position I am exiting in 2020 after selling Just Life for ~+70% but overall I am basically level for the year. So wish me luck and I'll wish you luck too.
NZX:NZMShort
by flyinkiwi10
New Zealand versus America – Who wins?New Zealand has had no new Coronavirus cases in the past 13 days. America is about to top 105,000 cases. New Zealand went hard and fast. The United States Is barely squashing the curve. New Zealand is in the phase were politicians are arguing when to remove all restrictions. United States is reopening to save a dwindling election. A stark contrast in the environment between the two countries. However, one thing remained constant – the returns in the major indices between both countries. New Zealand’s market posts similar returns to US Indices You can see its risk on between the NZX 50, New Zealand’s major indices and the Dow, S&P 500, and the NASDAQ. If equity markets are forward-thinking, the markets are indicating that major American companies will face a similar macroeconomic environment as companies in New Zealand. Granted, there are some fundamental differences. The SP500 is heavily weighted to major tech stocks such as Alphabet and Facebook, while the NZX 50 is primarily dominated by bank and bell-weather value stocks, with modest market caps. The better comparison would be the NZX 50 against the Russell 2000. We can see that although the shape for both indices are the same, the NZX 50 is doing far better than the Russel 2000. However this should be representative in all American indices. When investors pick stocks, they believe these stock will do relatively better than the others. If we take the same logic with markets, can we rationally say that American companies will fair similar or better in a couple of months in comparison to companies in New Zealand? With America opening while being nowhere ready, social unrest at an all-time high with leadership in disarray, will there be a bifurcation between countries whos coronavirus response was effective versus countries who still has ways to go? Is there an example where returns are more correlated with the Coronavirus response / macroeconomic environment? The markets have been heavily influenced by risk on / risk off consensus. Therefore it is difficult to find something that has been directly pricing in the forward looking macroeconomic enivornment. However if we compare the NZX to the Hang Seng Index we can see the market is pricing in the macroeconomic environment in Hong Kong, with Hang Seng line (blue) consolidating within a range while the NZX posts constant gains. Will the major United States indices follow a similar pattern with Hong Kong? There is a high likelihood that a second wave in America / second wave in other countries will see Investors rush to equity markets like New Zealand and Australia to park their hard earn dollars.
TVC:SPX
by BlackBull_Markets
1
NZX50 bearish indications *update*Thanks for viewing. The price decline of 2015 to 2016 can be plausibly labelled either a WXY (double ABC) correction or as a single impulse wave down. There seem not to be any failures within what is quite likely an impulse wave down. So that leaves two main scenarios on the table: 1. That we have had the wave (4) correction and are working on wave 5 (we are nearing the end of sub-wave 3 of wave (5)), or 2. That we are in the later stages of wave B up - with wave (C) (down) still to come. This scenario points to a deeper correction. That aside, Whether we are in wave B or wave 5 currently, immediate indications are short-term bearish. - There are three peaks on the RSI showing a declining trend while price makes higher highs. This would indicate a larger or smaller correction is inbound. Bearish divergence is a strong indication of lagging momentum. If we are in wave B, then 146 should act as support. If we are about to start wave C then $131 should act as support for wave (5). - The wave count seems to points towards a corrective phase. - Equity markets in the U.S. and Europe have experienced increasing volatility over the past year and have both seen significant drops in the last few days. This will increase market uncertainty. This is published solely for my own education and as an interested observer - who doesn't have a position in the market.
NShort
by flyinkiwi10