Last week saw extreme volatility take hold of the ASX as the coronavirus pandemic reached new levels in Australia. The S&P/ASX 200 Index (ASX: XJO) fluctuated widely, but ended the week down 13.1%. Over the past month, the ASX 200 has fallen 32.8% from its high of 7162.5 on 20 February, closing at 4816.6 on Friday.
The RBA cut the cash rate to a new record low of 0.25% as Governments introduced strict new travel restrictions and social distancing requirements. The Australian dollar fell to an eighteen year low on Thursday, buying just 55 US cents, before rebounding to above 59 cents on Friday.
Shares swung widely as of a recession took hold and economic shocks continued. Afterpay Ltd (ASX: APT) shares rode the rollercoaster, collapsing to $9.90 on Thursday but surging on Friday.
Here we take a look at the 5 biggest ASX 200 share price gainers last week.
Metcash Limited (ASX: MTS)
Metcash shares finished the week up 31.7% at $3.20. The food, liquor, and hardware retailer is likely benefiting from increased demand for products at its supermarkets. Metcash supplies a network of over 1,600 IGA and Foodland branded supermarkets.
ASX supermarket shares are currently experiencing unprecedented sales as customers seek to stock up amid isolation fears. In the face of unprecedented demand, Metcash has been forced to impose limits on items that stores in its network can purchase from its warehouse. Many IGA stores have also imposed purchasing limits.
Liquor stores may also see an increase in business with pubs and clubs shuttered by government restrictions on gatherings. Metcash’s liquor brands include Cellarbrations, IGA Liquor, Duncan’s, and Thirsty Camel.
In a sign of confidence in Metcash, National Australia Bank Ltd (ASX: NAB) and its associated entities took a significant stake in the grocery retailer last week. NAB became a substantial holder in Metcash with the purchase of 47,352,490 shares which means it now holds 5.21% of Metcash shares on issue.
NIB Holdings Limited (ASX: NHF)
NIB Holdings shares increased 24.9% last week to finish the week at $4.96. There was no significant news out of the health insurer last week but investors may be speculating that it will benefit from lower claims due to the coronavirus outbreak.
Analysts are predicting a ‘claims holiday’ for private health insurers, which could result in a near doubling of their domestic insurance operating profit in the June quarter. Elective surgeries are being rushed through in order to free up capacity for an anticipated rush of coronavirus cases.
As the hospital system is busy dealing with coronavirus cases, elective surgeries will take a back seat, reducing the number of hospital claims for private health insurers. For this reason, Credit Suisse has upgraded competitor Medibank Private Ltd (ASX: MPL) to an ‘outperform’ rating, up from a previous ‘underperform’ rating.
NIB Holdings also announced the appointment of a new Chief Financial Officer last week. Nick Freeman is currently the CFO and Company Secretary to Mayne Pharma Group Ltd (ASX: MYX), and brings 25 years experience in accounting and finance with him.
It comes amid a shakeup in the executive ranks at NIB Holdings, which announced the departure of a number of senior executives, “designed to significantly reduce operating costs and better align the company’s organisational structure with strategic priorities.”
Nufarm Limited (ASX: NUF)
Nufarm shares rose 19.7% last week to close the week at $5.04. There was no news out of the agricultural chemical company last week, however, its business is integral to the supply of food so is fairly coronavirus-resistant.
Earlier this month, the company announced it had received clearance for the sale of Nufarm Brazil to Sumitomo. The sale will net Nufarm $1.188 billion adjusted to reflect working capital and net debt balances as at 31 March. The net proceeds will be used by Nufarm to pay down existing debt.
The completion of the sale will have a favourable impact on Nufarm’s financing, depreciation, and amortisation costs. Nufarm confirmed its previous guidance for first half FY20 underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $55 million to $65 million.
Gold Road Resources Ltd (ASX: GOR)
Gold Road Resources shares finished the week up 11.7% at $1.05. After recording a serious fall of 34.9% the previous week, the gold miner recovered ground as investors sought out safe-haven assets.
Australia’s newest gold miner released an investor presentation earlier this month which declared it would be ramping up to full production in early 2020. All in sustaining costs of production are expected to be at the lower end of the industry in 2020 at around $1,100 to $1,200 per ounce.
Gold Road Resource’s Gruyere gold mine has 3.72 million ounces of ore reserve and is expected to produce 300,000 ounces in average annual gold production over an 11-year mine life. The Gruyere mine is expected to produce 250,000 to 285,000 ounces in 2020, proceeds of which will be used to pay down the ASX miner’s debt.
Jumbo Interactive Ltd (ASX: JIN)
Shares in Jumbo Interactive moved 9.6% higher last week to finish the week at $9.15. Nonetheless, Jumbo Interactive shares are still down over 60% from highs of nearly $28 in October last year.
There was no news out of Jumbo Interactive last week, but as an online lottery retailer, it may benefit from the sudden effective shutdown of in-person gambling. Government restrictions on gatherings of 100 people or more and social distancing requirements have taken their toll on casinos, which can no longer cater to the same numbers of gamblers.
Mounting fears of a recession may also be supporting the Jumbo Interactive share price. Some research has found that while casino gambling recession stagnates during recessions, lottery gambling is fairly recession-proof.
Jumbo Interactive is an online lottery retailer, meaning it will remain unimpacted by social distancing requirements and restrictions on gatherings. As more people seek online entertainment and relief from current doom and gloom, Jumbo Interactive could well stand to benefit.
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Kate O'Brien owns shares of Mayne Pharma Group Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO and National Australia Bank Limited. The Motley Fool Australia has recommended NIB Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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