New Zealand’s value investor hunts for gems in the time of coronavirus crash

The uncanny stillness is heading to blanket the whole world while the people even in the safety of their homes experience restlessness. It appears as if all the ominous prophecies have taken a concrete form as the entire human civilisation now grapples against the deadly coronavirus.

The severity of the epidemic looks evident with the escalation in the infection despite the people adopting social distancing and the patients going into self-isolation. As per the situation’s report released by WHO on 26th March 2020, the total number of COVID-19 cases has reached to 462,684, and the death toll rose to 20,834 across the world.

Amidst such difficult times, all have their ears perked up as they eagerly wait for the positive updates in the form of economic upswing or a ground-breaking vaccine discovery. While the researchers yet struggle with the discovery part, the financial markets are adding a decent dose of optimism around some corners of the world with New Zealand being one of them.

Market Movement Amidst Uncertainty

On 27th March 2020, the stocks in New Zealand joined an upside rally, sending a positive signal in the early trading hours. S&P/NZX 50 index surged by 95.610 points, an increase of 0.99% from the previous close of 9632.47, as at 3:16 PM NZDT on 27th March 2020. However, the index ended the day at lower note, down 0.71% to stand at 9,557 on 27th March 2020.

There has been an upbeat trend noticed in many NZX-listed stocks, gaining positive momentum for three days straight despite the turmoil experienced in the broader financial markets. S&P/NZX SmallCap index, famous for its high-volatility, rose 0.47% or 205.530 to end the week at 43,683.850 on 27th March 2020.

The global market could also be seen reverberating the similar sentiments that have sent the major stock indices to go north in the last few days. The United States (US) Dow Jones Industrial Average has shown optimistic trends as it rose by over 3900 points in a period of three days to 26th March 2020. Similarly, NASDAQ Composite also showed upward trajectory by advancing around 13% from 23rd March 2020 to 26th March 2020. It seems that the US government’s upcoming massive relief package worth 2.2 trillion USD for coronavirus has surged positive current in the marketplace as the investors hope to witness economic stability in the market. Despite the record-high unemployment claims in the US, the rally seems to pinpoint that the investors have not abandoned their hopes as of now.

The Australian stock market likewise demonstrated positive drift as the stock market opened to witness many stocks gaining positive drive on 27th March with stocks like ALS Limited (ASX: ALQ) and WiseTech Global Limited (ASX: WTC) closing the session by gaining over 5%. In an effort to save the economy, the Australian government has rolled out a series of stimulus packages. However, on 27th March 2020, S&P/ASX 200 closed at 4,842.4, down 5.30%.

Consumer Discretionary Leading the Sector Fight on NZX

Many businesses which already were hit by Covid-19 impact saw further closure in their operations as PM Jacinda Ardern imposed four weeks national emergency in the country, shutting down every non-essential service. The stimulus package of $12.1 billion rolled out by the New Zealand Government is directed at improving the economy while also aiding the people and the businesses in the current time of crisis. Amidst such turbulent scenario, many companies and industries are projected to suffer a heavy downfall.

However, the market sectors driven by the upbeat trends showed optimistic movements in the last couple of days. By the end of the trading session on 26th March 2020, a majority of the sector index in New Zealand showed positive intraday movement, primarily led by the Communication Services, Information Technology, Utilities and Real Estate sectors. The Utilities sector prominently consist stocks that caters to the basic needs of the people and generally shows consistent demands. As the movement is restricted and the people find themselves at home, the investors are expecting surged demand for the communication services.

On Friday, many sectors joined a downward trend, however, the real estate, consumer discretionary, healthcare and information technology were among the ones who managed to mirror the similar positive movement of the previous day. By the end of the trading session on 27th March 2020, S&P/NZX All Consumer Discretionary witnessed an intraday surge of 4.40%, showcasing the highest growth compared to the other sectors. S&P/NZX All Health Care also showed a rise by 1.95 points to close at 2,439.680.

Latest stock performance of some NZX-listed Companies

The stock of New Zealand’s staffing and recruitment company, AWF Madison Group Limited, (NZX: AWF) rose by 21% to close at NZ$1.210 per share on 27th March 2020. Likewise, the stock price of Burger Fuel Group Limited (NZX: BFG) and Good Spirits Hospitality Limited (NZX: GSH) also appreciated by 20% intraday on 27th March as the shares closed at NZ$0.300 and NZ$0.060, respectively.

However, the pressing concern of business failures and unemployment amidst the halted economy continue to rise. In the past month, AWF Madison’s share price has dwindled by around 34.5%. And both Burger Fuel and Good Spirits Hospitality have reportedly closed their operations due to the imposition of both level 3 and 4 government’s measures against coronavirus, which would further impact their results.

Many companies are bearing the inflictions by the current market volatility. The stocks of the beer and cider product manufacturer, Moa Group Limited (NZX: MOA) closed at NZ$0.142 on 27th March, down by 8.39% intraday. The quarantine measures by the government have shut down the bars, restaurant and other leisure activity centres. Moreover, the coronavirus impact in China has plummeted the demand for steel products as China is the highest importer of iron ore. The shares of Steel & Tube Holdings Limited (NZX: STU) plunged by 6.86% intraday to close at NZ$0.475 on 27th March 2020.


While the uptrends acknowledged in the market brought positivity along for a couple of days, the optimism was decimated by the downfall on 27th March. Till the harsh waves of coronavirus subside, the sinusoidal waves offering short-lived hopes seems to serve as an anchor to demonstrate investor’s fluctuating trust amidst the outbreak. Although the duration of the epidemic remains unclear and the researchers’ struggle to unveil the drug continues, the investors are expected to utilise the bearish trends to fulfil their value investment goals.

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