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Australia (ASX) & New Zealand (NZX) Market Movers – 29th May – Stock in Focus: Heartland Bank (NZX: HBL)

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

The Australian share market sold off on Monday (ASX 200 index -0.48%) as the ASX 200 market index is nearly back at the key 6000 level. Energy sector stocks fell on an oil price retreat as Russia and Saudi Arabia signalled their intention to increase oil output with Woodside, Santos, and Beach Energy all being hit.  In other news, Standard and Poor’s (S&P) Global Ratings said Telco giant Telstra’s incumbent position in the industry had been “diminished” and lowered its long-term issuer and issue ratings on the company to A-minus, from A. The telco’s ratings were downgraded due to intense competition across its core businesses and lower margins, Telstra shares fell -1%.

The New Zealand market was in positive territory yesterday (NZX 50 index +0.07%) with Spark New Zealand and Arvida Group making solid gains, while Scales Corp and Fisher & Paykel Healthcare weakened. Fisher & Paykel Healthcare shares were lower as the company lifted 2018 annual profit to the top end of its forecast range and said it expects record earnings in the coming year as it benefits from growing global demand.  Profit rose 12% to $190.2 million and management forecast 2019 annual operating revenue of about $1.05 billion and profit of about $210 million. While it was a solid result, it appears the market was expecting a little more.

Global markets were quiet overnight as both the US and UK markets were closed on holiday.

European stocks and the euro moved lower overnight amid concern new elections in Italy might spark fresh debate about a break-up of the region’s single currency/threat to the Eurozone. Italian stocks slumped on Monday at the end of a roller-coaster session as investors fretted that new elections could see anti-establishment parties win more support.

As we touched on yesterday, the price of oil has been on a strong run year to date (hitting its highest levels since 2014), although now appears to be pulling back. Oil extended its slide overnight as speculation grows that Russia and Saudi Arabia may boost oil output to slow the rise in prices. We would expect continued pressure on the energy sector, including Australian listed energy stocks today.

Stock in Focus: Heartland Bank (HBL:NZ)

Shares in Heartland Bank (HBL) have moved higher over the last week after releasing a decent third quarter profit result.

Looking at some of the detail, HBL lifted third quarter profit +11% and said it expects annual earnings to be at the upper end of its previously advised range of $65 million to $68 million. Profit was $17.5 million in the quarter, taking net profit to $48.6 million in the nine months ended March 31, up from $44.9 million a year earlier.

“While growth has been maintained overall, Heartland’s strategy has been to grow those areas which are core to future growth, including motor, reverse mortgages, small business, livestock and personal lending. This has meant a reduced focus on larger business and rural relationship lending which, as a result of some significant repayments, has reduced the net growth in receivables for business and rural,” it said.

This was a decent result from HBL, but as we have highlighted we believe it should be kept in mind that HBL trades at a premium to banking peers while also being a higher risk investment proposition (given the nature of their lending business).

3 Things Markets Will be Watching this Week

1.  Geopolitics will likely remain a focus for investors – with trade talks between the US & China, and the between the US, Canada, and Mexico continuing.

2.  The Reserve Bank of New Zealand releases its latest financial stability report on Wednesday.

3. Important US inflation data and monthly employment figures are published at the end of the week.

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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