Jarden Brief: The Chinese company Trump plans to blacklist

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

New Zealand

The NZX50 was up 1.0 per cent on the day. Larger stocks outperformed as the NZX10 rose 2.0 per cent.

Fisher and Paykel Healthcare was the best performer on the day, up 5.8 per cent. Kiwifruit growers Seeka was the next best performer, up 4.6 per cent. Kathmandu Holdings was the worst performer on the day, down 6.2 per cent. Kiwi Property Group was the next worst performer, down 3.3 per cent.

Kathmandu Holdings CEO Xavier Simonet yesterday announced his resignation, which triggered a sell down of the company’s shares. After five and a half years with the company, Mr Simonet is leaving to pursue an opportunity in the Australian public sector.

Chairman David Kirk believes under Simonet’s leadership the company has been positioned to move forward as a world class outdoor adventure company, “diversified by geography, channelled to market and seasonality.”

Export logistics business QEX was down 8.3 per cent after releasing its interim results yesterday. The report disclosed revenue for the half of $19.4 million, down from $27.8 million for the previous comparable period.

The company put its relatively poor performance down to Covid-19 related decline in the Daigou sales channel and changing consumer habits in China. The half was also impacted by the theft of $4 million of inventory from a warehouse in China.

International

At time of writing, the SPX500 was down 0.9 per cent, the Dow Jones Industrial was down 1.3 per cent, while the Nasdaq was up 0.6 per cent. Small cap stocks slightly underperformed, with the SPX Midcap 400 down 1.2 per cent.

Energy and Financials were the worst-performing sectors on a day when all sectors were in the red, respectively down 2.7 and 1.4 per cent. Healthcare was the relative best performer, down 0.2 per cent.

Information and analytics company IHS Markit Ltd was the best performer in the index, up 8.2 per cent. The gain was driven by news that S&P Global (up 2.3 per cent) was to acquire the company for US$44 Billion – the largest acquisition of the year to date.

Global semiconductor company Advanced Micro Devices was the next best performer, up 3.6 per cent.

Oil and Gas exploration company Pioneer Natural Resources was the worst performer in the index, down 5.1 per cent. The fall was driven by uncertainty surrounding OPEC talks whereby members were expected to agree to large output cuts.

The next worst performer was apparel retailer Gap, down 5.0 per cent.

Asian markets:

At time of writing, the Shanghai index was down 0.5 per cent and the Shenzhen index was down 0.2 per cent. The Nikkei 225 was also down 0.8 per cent.

China’s third largest oil company, China National Offshore Oil Corp, is facing blacklisting by the US as the Trump administration seeks to take a series of moves against Beijing in the last weeks of the administration.

The company’s operations have caused some controversy as it operates in the South China Sea where China claimed drilling rights far from its national borders and within the exclusive economic zoned waters of Vietnam and the Philippians.

The portion of the company’s stock listed on the Hong Kong stock exchange was down 14 per cent on the news. This demonstrates the power that President Trump still possesses in the last days of his administration. It raises the question about what the Biden administration will do to continue or undermine Trump’s combative policies.

Commodities:

At time of writing, Gold was down 0.4 per cent, trading at US$1781.9 per ounce. WTI Crude was down 1.9 per cent, trading at US$44.7 per barrel. The ten-year Treasury yield was down to 0.85 per cent.

Australia

The ASX 200 slid by 1.3 per cent yesterday, dropping amidst continued trade tension between Australia and China. Despite this, the last trading day of November marked a record 10 per cent gain for the main index, its best month since 1988.

Treasury Wine Estates led the index down, dropping by 6.9 per cent after worsening trade tensions – and the increasing likelihood that it may lose more than 30 per cent of its profits from the exorbitant Chinese tariff imposed on Australian wine imports.

The producer of the Penfold brand of wines has been hit hard by the tariffs, with Treasury making up ~40 per cent of the Australia-China wine export market by itself. Since last Wednesday, its stock price has fallen by 18.7 per cent.

Meanwhile, its competitor Australian Vintage has had less negative investor sentiment given its greater exposure in the domestic and UK markets.

While all sectors were in the red, the Tech stocks performed well on a relative basis, only falling -0.1 per cent after gains were made by EML Payments (+4.5 per cent), Netwealth (+3.3 per cent) and WiseTech Global (+3.2 per cent). The Healthcare sector was also resilient, with NZX-listed Fisher & Paykel Healthcare (+5.1 per cent) and Polynovo (+3.9 per cent) supporting the sector.

Investors seemed to rotate back out of transport and oil stocks, which rose heavily throughout the month, due to vaccine-fuelled optimism. Whitehaven Coal was down -9.6 per cent, leading a group of other mineral stocks such as Perseus Mining (-4.7 per cent) and Regis Resources (-4.2 per cent) down. Corporate Travel was also down -4.7 per cent, as the worst performer in the transport industry.

Coming up

Twelve companies are set to report earnings in the next trading session, including recently offered Snowflake Inc. The ADP Employment report will also be released, along with ISM Manufacturing, New orders and Construction spending.

Australia

Australian PMI Manufacturing numbers will be released by data and analytics company IHS Markit, while Taco Bell and KFC operator Collins Foods will be releasing its first-half earnings.

• 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

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