Australia (ASX) & New Zealand (NZX) Market Movers – 15th May – Stock in Focus: PGG Wrightson (NZX:PGW)

Australia and New Zealand Market Movers is provided by: Australasian Trading Management.

The Australian share market was higher on Monday (ASX 200 index +0.31%) as the ASX closed just half a point shy of a decade-long high. The materials sector led gains once again, buoyed by higher commodity prices. In stock news, shares in Elders were higher as it announced an 8% rise in net profit after tax to $41.4 million for the six months ended March 31, 2018, with revenues rising by 2% to $749.7 million. On the flipside, Telstra was lower as it warned its shareholders that earnings would be at the lower end of the company’s $10.1 billion to $10.6 billion 2018 guidance on the back of lower revenue from fixed and mobile customers.

The New Zealand market rallied yesterday (NZX 50 index +0.42%) ahead of the MSCI (a major global market index) rebalancing today, as the possible addition of A2 Milk saw it lead gains. Fletcher Building and Mercury New Zealand saw their shares come under pressure as they are rumoured to be leaving the index.  In stock news, Mercury said it has agreed to buy 19.99% of Tilt Renewables from the Tauranga Electricity Consumer Trust for $144 million, or $2.30 a share, a 24% premium to its last trading price.

Global markets were generally higher overnight, with the MSCI World market index at its highest level in about 2-months.

Investor sentiment was positive on the back of hopes for improving trade relations between the US and China. President Trump made conciliatory remarks towards China, and Trump’s reversal came as high-level trade talks between the world’s two largest economies were due to resume this week after Washington’s tough stance on trade and tariffs put the countries on track for a potential trade war.

Closer to home, there has been more takeover related news flow around 2 of the stocks under our research coverage, Healthscope & PGG Wrightson. Healthscope shares gained +5% yesterday on news that a rival takeover bid had been received from Canada’s Brookfield Asset Management. The new bid values Healthscope at $4.35 billion, $240 million more than the offer made by a BGH Capital-led consortium last month. It is an interesting situation as Australian Super has confirmated that it will reject, vote against or not accept any takeover proposal for Healthscope other than its own.

Stock in Focus: PGG Wrightson (PGW:NZ)

Shares agri-business PGG Wrightson (PGW) have also jumped around continued takeover rumours, with the most likely potential buyer being Australian counterpart Elders (ELD).  Elders CEO Mark Allison said on Monday Elders was looking closely at PGG Wrightson, which analysts value at up to $600 million, but he emphasised there were several others under consideration and it would only proceed on any deal if it was earnings per share accretive. He stated Elders wanted to be on the front foot in an industry undergoing consolidation, and they were looking at a number of potential takeover targets.

3 Things Markets Will be Watching this Week
1. Corporate earnings season rounds up in the US this week.
2. Australian unemployment data is published on Thursday.
3. Minutes from the last Reserve Bank of Australia meeting are released on Tuesday as well as a speech from the assistant RBA governor.

Australia and New Zealand Market Movers is provided by Australasian Trading Management. ATM is an independent research house covering stock analysis across major markets including the ASX, NZX and US markets. We make our research easy to understand and concise, taking complex issues and simplifying them so that you can make informed and accurate decisions. We have no conflicts of interest and our only goal is to generate positive returns for our members. We run transparent model portfolios to track performance and invest where we see the most value, in companies of all sizes across all industries, and often in smaller companies.

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Categories: Australian Stocks, New Zealand Stocks

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