The lockdown stocks play was out in full force yesterday on the ASX yesterday as travel and aviation companies were sold off but retailers – especially onliners – saw strong gains.
The banks and big miners held firm and helped the ASX-200 end with a smaller fall than seemed possible at the start of the day.
The ASX 200 lost just 0.7 points to close at 7307.3, having been as low as 7273.7 (0.3%) in late morning trade.
Travel stocks were under pressure as borders slammed shut on news of COVID outbreaks in Sydney, Brisbane, Perth, and the Northern Territory. Webjet, Qantas, and Flight Centre all declined by about 4%. Rex shares were down 2.4%.
Shares in Helloworld fell more than 2% and Corporate Travel saw a 2.6% loss.
Those that saw rises were led by online homewares group, Temple & Webster – their shares rose more than 10% as investors reckoned they might repeat their strong growth of the 2020 pandemic and beyond.
Likewise shares in Kogan jumped sharply – up by more than 6% for the same reason. But it is already suffering from being overstocked so any gains might be very slow in coming, if at all.
JB HiFi had also did well in the 2020 pandemic but investors saw small gains this time – the shares up just 1.2%.
Shares in rival Harvey Norman did better – up 2.1% but gains for these two and Kogan are based on a repeat of last year’s strong surge in home office and working from home equipment and tax write offs.
You have to wonder how much legs the home office boom will have this time around if the lockdown persists.
That’s probably also why shares in Wesfarmers only managed a 1.3% gain, despite Bunnings and Officeworks doing very well in 2020.
Shares in women’s fashionwear group Mosaic brands (Noni B, Rivers, Millers) saw a 4% loss as it was hurt by the lockdowns last time when many shopping malls closed. Punters see that being repeated if the lockdowns persist.
Shares in Premier Investments rose 1.8% — it rode out the last lockdown with considerable taxpayer support but then saw sales explode (along with profits) in the rebound. Investors see it repeating that if the lockdowns continue.
Mall operators were sold off as well.
Securities in Scentre – the biggest shopping centre owner in the country – dropped 2.5% but those in rivals in the shape of Shopping Centres of Australia (down 0.3%), Mirvac (down 1%) did a bit better.
Stockland though saw its securities down 2.4% (it has retirement as well as new homes to go with its retailing investments).
CBD owners Dexus and GPT saw small falls of 1.6% and 0.9% respectively – investors think their growing logistics investments might be a cushion if the lockdowns deepen.
Consumer-facing shares were higher as panic buying drove Woolworths shares up 2.9%, Coles 0.6% higher, and Woolies’ new drinks offshoot Endeavour Group up 3.8%.
Investors reckon its Dan Murphy’s chain will do well if the lockdowns persist, but a big drag will be its hotels revenue and earnings from poker machines. They were crunched in 2020.
Retailer Metcash saw its shares up 3.6% thanks to the Covid lockdown surge and a record result, higher dividend and buyback (see separate story). But it couldn’t hang on to the gains and it closed up just 0.8%.
It has Mitre 10 hardware and Home Timber as major plays (and rivals to Bunnings) on the home renovation boom as well.
Many of the share price rises and falls were a bit of a kneejerk reaction as they are trying to anticipate benefits from a situation that remains fluid and volatile.
Investors in many retail and internet stocks have been down this route a couple of times in the past year and know that the gains can’t be, or won’t be sustained – the boom and bust in the Kogan share price explains that.
But that the stricken travel and tourism companies face months of continuing pain as the chances of a border re-opening moves deeper into calendar 2022.
Gains for the market’s biggest companies – BHP, Rio Tinto and Fortescue (1% or less) Commonwealth Bank, and CSL (up 1,1%) — helped even the ledger. But shares in Westpac, ANZ and NAB fell.
The CBA rose 0.6% on yet more silly speculation that it could do a share buyback when it will almost certainly pay a higher final dividend for the financial year ending tomorrow, June 30.
Afterpay shares fell more than 7% on concerns about growing competition – the company with its buy now pay later product was a star of the 2020 lockdowns and switch in retail spending patterns.
It is interesting it wasn’t on the big price rise list yesterday.