Yovich & Co. Market Update - 22 December 2020

Dec 22, 2020 | Commentary

Market update 2020-12-23

Last year if anyone had predicted that the world was going into lockdown in 2020 due to a virus, and markets would go through the fastest fall in history and then recover by the end of the year, I would not have believed them. But it happened, and investors who stayed true to their long-term goals, and not focused on their short-term portfolio values, have been rewarded. This year Yovich & Co facilitated clients’ orders and personal portfolio services from home and are now grateful to be back in the office providing face to face meetings. We were all excited to have Tracey back in the office earlier than anticipated, as sadly, her overseas trip was cut short due to the pandemic. From all of us at Yovich & Co we wish you a Merry Christmas and a prosperous New Year. The office will be closed from 12.00pm Tuesday 24 December and will reopen 5 January. Below is a summary of the year in review:

New Zealand Equities

From 3 January 2020, to 18 December 2020 the NZX50 is running at a close third place at 9.39% against other trading partners, the NASDAQ (41.40%) takes first place followed by Shanghai (10.09%). Interest rates this year have reached record lows in the aim to keep the economy alive. These low rates have influenced investors to rotate out of bank term deposits, into higher yielding investments. Thus, pushing up stock prices of listed companies that provide high yielding dividends.

Performance 2020

As an example, if an investor purchased $500 of the SmartShares NZ Top 50 ETF (FNZ) on 3 January 2020 ($3.15), it would be worth ($3.38) $536.51 as of 18 December 2022, that is a 7.30% capital return (excluding dividend payments).

The NZD vs AUD has fluctuated greatly this year beginning the year at 0.9593 then dropping to 0.9365 (18 December 2020). Mid March the exchange rate got as high as 0.9901 and in August a low of 0.9086. The USD started the year at 0.6664 then dived in March to 0.5663 ending the year on an upwards trend at 0.7139 (18 December 2020).  

New Listings and takeover this year

This year has seen a lot of new bond issuances, as companies took advantage of low interest rates, along with capital raises and to strengthen their balance sheets.

Rua Bioscience Limited, a producer of cannabinoid derived medicines, listed on the NZX 22 October 2020 at a price of 50 cents and price spiked to 70 cents, currently trading at 61 cents.

Radius Care Limited, an aged care provider with over 20 locations within NZ. Direct listed on the NZX December 11, 2020 at a share price of $1.55 closing the day at $1.75 and currently trading at $1.13. 

New Zealand Rural Land Co is focused on investing and acquiring rural land across the NZ agricultural sector. Listed 21 December at a price of $1.25 per share.

Abano Healthcare has been acquired by Bidco, the takeover has been a rocky ride, with the offer price fluctuating from $5.70 to $4.45 per share. Final price of $5.20 per share was agreed with expected payment on December 22, 2020 at $5.20.

Stock picks as mentioned in the 09/01/2020 Yovich & Co Newsletter vs current value:

Newsletter vs current value 2020 12 23

 If an investor invested $10,000 into each company at the beginning of 2020, the total value will now be worth $105,519

International News

The US election played out this year with the result being that Joe Biden is the President Elect. The market has responded positively to the results. Mr Biden is expected to bring reduced unrest in global trade. Currently the US$900b COVID-19 relief bill is still in discussion, if approved, expect to see the S&P500 index increase.

Brexit: The United Kingdom and the European Union have warned a no-deal Brexit was now likely, even as they agreed - once again - to extend trade talks beyond a self-imposed Sunday deadline. Our thoughts are with the United Kingdom as they enter new restrictions over the Christmas period to curb the rapidly spreading infection.

 

 

 

 

Disclaimer: This publication has been prepared for your general information. While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken for any errors or omissions. This publication does not constitute financial or insurance product advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. No part of this publication may be reproduced without prior written permission from our company. Disclosure statements relating to the financial advisers associated with this newsletter are available on request and free of charge.

 

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Nathanael McDonald



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