The Match Out: ASX hit as COVID continues to cause disruption in Asia, EML Payments drops on CEO departure

James Gerrish

Market Matters

It was a very quiet but overall negative session to kick off the new trading week, the positive read-through from SPI Futures on Saturday morning giving way to a slow and steady, meander lower for stocks, weighed by weakness across Asia as COVID numbers tick higher.

  • The ASX 200 finished down -75pts/ -1.14% at 6602.
  • The Healthcare sector was best on the ground (+0.12%) and the only area to finish in the green, while Energy (-0.12%) & Property (-0.42%) were relative performers.
  • Materials (-1.44%) and Real-Estate (-1.24%) the weakest links.
  • Macau is being gripped by its worst COVID outbreak to date, and they’ve closed down nearly all businesses – including casinos sending gaming stocks down more than 6%.
  • Material stocks were hit locally as a consequence – another COVID outbreak, further shutdowns and supply chain issues are not what the global economy needs right now.
  • Coal stocks bucked the trend though, New Hope (ASX: NHC) +4.72% on a broker upgrade while Whitehaven Coal (ASX: WHC) was also higher.
  • SCA Property (ASX: SCP) +1.41% was upgraded to a buy from Citi – some less negative rhetoric is starting to creep into the retailers/landlords it seems.
  • EML Payments (ASX: EML) -24% after CEO Tom Cregan leaves on mutual agreement – seems a miss – more on that below
  • Costa (ASX: CGC) -7.99% was hit with a broker downgrade this morning from Credit Suisse, a bearish note accompanying and shares started selling off before the company came out and tried to calm things down, saying… Ahead of the release of half-year results, Costa notes its operations performed well in 1HCY2022 and unaudited results are anticipated to be in line with the Company’s expectations
  • UBS has tweaked its best ideas list, in resources adding IGO Limited (ASX: IGO), in Financials it added ANZ and Steadfast (ASX: SDF), and amongst Industrials UBS added Metcash (ASX; MTS), Transurban (ASX: TCL) and TPG Telecom (ASX: TPM), four of which already feature in MM Portfolios.
  • Activist shareholder J Cap has just released a new short report on Lake Resources (ASX: LKE) – one to watch tomorrow.
  • Iron Ore was ~4.7% lower in Asia today hurting Fortescue (ASX: FMG) -2.6% and RIO -2.12%
  • Gold was flat at around US$1741
  • Asian stocks were lower Hong Kong was down -2.98%, Japan was flat while China was off -1.22%
  • US Futures are all lower, down around 0.8% a pop at our close.

ASX 200 chart

EML Payments (EML) 96.5c

EML -24.61%: a difficult day for the pre-paid card company after their CEO resigned. There was little explanation given for Tom Cregan’s abrupt departure other than the decision being made by mutual agreement. The role has been filled with EML board member Emma Shand taking on the MD & CEO role. Shand comes highly regarded and will hit the ground running given she has spent the last 10 months as a director. Despite that, the shuffle is a concerning development for EML just a few weeks out from their FY22 results.

EML Payments

Broker moves

  • Resimac Group Reinstated Buy at Bell Potter; PT A$2.15
  • Magellan Financial Raised to Neutral at Macquarie; PT A$11.50
  • Domain Holdings Raised to Buy at Goldman; PT A$4.20
  • Scentre Group Raised to Neutral at Citi
  • SCA Property Raised to Buy at Citi
  • Pilbara Minerals Raised to Buy at Jefferies; PT A$2.75
  • Newcrest Cut to Hold at Jefferies; PT A$29.32
  • Nickel Industries Raised to Hold at Jefferies; PT A$1
  • Mineral Resources Raised to Buy at Jefferies; PT A$65
  • Chalice Mining Raised to Buy at Jefferies; PT A$6.90
  • St Barbara Raised to Outperform at Macquarie; PT A$1.10
  • Costa Cut to Neutral at Credit Suisse; PT A$2.80
  • News Corp GDRs Rated New Overweight at Barrenjoey; PT A$35
  • Seven West Rated New Underweight at Barrenjoey
  • Aussie Broadband Rated New Underweight at Barrenjoey; PT A$3.45
  • HT&E Rated New Underweight at Barrenjoey; PT A$1.25
  • Southern Cross Media Rated New Neutral at Barrenjoey; PT A$1.25

Major movers today

Have a great night,

The Market Matters team.

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James Gerrish
Portfolio Manager
Market Matters

James is Portfolio Manager & Primary Author at Market Matters, a daily investment report with over 2500 subscribers that offers real market insight. He is also Senior Portfolio Manager within Shaw and Partners heading up a team that manages...

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