Which New Zealand ASX companies are set to benefit as the nation reopens?
Link copied to
There are over 50 ASX companies based in New Zealand and some could benefit as the country re-opens.
New Zealand has been in varying degrees of restrictions since mid-August, with Auckland under the heaviest restrictions.
When it first bought in restrictions, the country anticipated it would quickly eliminate the Delta variant but it has not been as successful.
50 days on, prime minister Jacinda Ardern has formally abandoned her elimination strategy saying lockdowns would end once 90% of the eligible population was double-vaccinated.
But with just under 40% of the population double-vaccinated that step remains some weeks away.
Overall, while companies have not been hit as much as the first lockdown in April 2020, the impact is starting to be felt.
New Zealand Media and Entertainment (ASX:NZM) is one company which commented this week. It owns media outlets and radio stations across the Tasman including the New Zealand Herald.
NZM said while advertising revenue was above levels seen even in the last September quarter, they had been impacted compared to the June quarter next year.
The company is expecting earnings between $63 million and $67 million which would be slightly below the $67.3 million in FY20.
Travel and tourism stocks will benefit the most with pertinent examples being Skycity (ASX:SKC) – which owns 3 casinos across the Tasman in Auckland, Hamilton and Queenstown – as well as Auckland Airport (ASX:AIA) and flag carrier Air New Zealand (ASX:AIZ).
Air New Zealand released its operational statistics for the month of August this morning and despite lockdowns impacting half the month, passenger numbers grew 43.9% compared to August last year with New Zealanders limited to domestic holidays.
However it previously tipped that nationwide Level 3 or 4 travel restrictions could cost $45 million to $55 million a month.
For SkyCity, its Auckland property has been closed for six weeks but re-opened its Queenstown casino at Level 2 restrictions and hinted it would re-open Auckland once the City of Sails was downgraded to Level 2.
Fast food franchisor Restaurant Brands (ASX:RBD) has also been impacted. It runs KFC, Pizza Hut and Taco Bell in New Zealand and it also has stores in Hawaii and California.
Under Level 4, it could not even sell takeaway food but noted in its annual reports California and Hawaii were performing even though the New Zealand market made it difficult to provide firm profit guidance.
But despite the similarities between the Australian and New Zealand economies, one difference is that interest rates will be lifted sooner.
Similar to Australia, record low interest rates have triggered a lending boom which has in turn caused housing prices leaving regulators concerned.
While Australia may not lift rates until 2024, New Zealand’s Reserve Bank is meeting tomorrow and economists are expecting it to move having delayed it by a couple of months thanks to the lockdown.
In fact, New Zealand economists (surveyed by Bloomberg) are tipping the bank not just to lift rates tomorrow but to raise it as high as 1.5% by August next year.