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Australia (ASX) & New Zealand (NZX) Market Movers – 8th June – Stock in Focus: Coca-Cola Amatil

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

The Australian share market made gains on Thursday (ASX 200 index +0.53%) with broad-based gains led by the miners and supported by the energy sector. Major mining stocks BHP, Rio Tinto, and South32 all had a strong trading session. On the flipside, AMP shares fell to an all-time low on news Slater and Gordon had become the fourth law firm to level a shareholder class action against the embattled financial giant. In other news, Wesfarmers shares rose following the company’s investor day where chief executive Rob Scott said that the company’s focus was investing in itself rather than seeking acquisitions.

The New Zealand market was up nearly +1% yesterday (NZX 50 index +0.98%) as the market notched a new all-time high. Gains were led by A2 Milk and Fletcher Building amid international demand for Kiwi companies. In stock news, Kiwi Property Group held their annual general meeting where it reiterated dividend guidance and said its current projects are on track.  The company said its annual dividend payment for the year to March 31, 2019 will be 6.95 cents per share, up from 6.85 cents in the year to March 2018.

Global markets were mixed overnight as the recent rally in technology stocks came to a halt with the Nasdaq experiencing its first loss in five days, while a jump in McDonald’s shares and energy stocks boosted the Dow.

Once again, stocks appear to be trading in a range as investors digest macroeconomic news from Italian elections to trade tariffs, while the fundamentals around the economy and company profits remain solid. Investors will look to a G7 summit starting in Canada on Friday for more indications around the extent of trade tensions and further trade tariffs.

In other news, the price of oil jumped overnight, lifted by concern about a steep drop in exports from Venezuela and concerns OPEC may not raise production at its meeting this month.

Stock in Focus: Coca-Cola Amatil (CCL:AX)

In a media report this morning, Coca-Cola Amatil (CCL) CEO Alison Watkins noted that there is a prospect of a sugar tax being introduced into Australia at some stage. There has been a push for a sugar tax in both Australia and NZ, with such a tax already adopted in 28 countries with Britain being the latest country to implement a sugar-sweetened beverages tax.

Watkins said she knows radical action is required, and CCL has already committed to a 10% reduction in sugar from 2016 levels by 2020 and has other plans in the pipeline, which it hopes could avoid a sugar tax and more regulation.  To support its new sugar target, CCL is switching to smaller portion sizes, reformulating fizzy drinks to use no sugar or sugar substitutes and is diversifying into alcohol, coffee and water, which Watkins says is being led by consumer demand with a shift towards healthy eating.

While CCL is facing headwinds, management are focussed on delivering medium term earnings growth, and we think there is significant negativity being reflected in the stock price. We continue to see CCL as an attractive option for income investors, given its dividend yield of over 5%.
3 Things Markets Will be Watching this Week

1.                The price of oil as it continues to retrace from recent highs.

2.               The Reserve Bank of Australia makes an interest rate decision on Tuesday.

3.               Australian economic growth (GDP) data is published on Wednesday.

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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