The ASX saw another week of wild swings last week as it grappled with a stream of coronavirus related news. The federal government announced its massive $130 billion wage subsidy package, which drove a market rally on Monday. The ASX recorded its biggest on-day gain in 40 years, with the S&P/ASX 200 Index (ASX: XJO) rising 7%.
By Friday’s close, the ASX 200 finished the week up 4.65% at 5067.5, which is more than 11% up from a low of 4546 on 23 March.
Here we take a look at last week’s biggest ASX fallers.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
Shares in Sydney Airport tumbled 14.9% last week to finish the week at $5.16. Shares are now down 43% from a high of $9.04 in January, but are up nearly 10% from a low of $4.70 in March.
There was no news out of Sydney Airport last week, however investors are likely wary of the company due to the steep decline in passengers through the airport and the large debt balance it is carrying. Passenger numbers were down 9.3% in February and the March decline is expected to be much steeper.
Sydney Airport has a significant amount of debt on its balance sheet, with interest bearing liabilities of $9,426.7 million as at 31 December. Nonetheless, the company said in March it had a strong balance sheet and liquidity position. It says its average debt maturity has a tenor of over 6 years, with $370 million of unrestricted cash and $1 billion in available undrawn bank facilities.
Resolute Mining Limited (ASX: RSG)
Resolute Mining shares finished the week down 12.2% at 79 cents. Gold prices have retreated somewhat from March highs, hurting the miner, which operates mines in Mali and Senegal. Coronavirus has now appeared in both Mali and Senegal, which is cause for concern given Africa’s fragile health systems.
Last week, Resolute Mining announced the sale of its Ravenswood mine in Queensland. The company received $100 million upfront for the sale consisting of $50 million in cash and $50 million in promissory notes which earn a 6% coupon. There is potential for up to $200 million in additional payments which depend on the average gold price and investment outcomes of Ravenswood.
CEO John Welborn said the sale maximises value for shareholders and, “enables us to focus our attention and energy on our African portfolio and the abundant opportunities for further growth and value creation.”
Following the sale, Resolute Mining updated its guidance to 430,000 ounces of gold at an all in sustaining cost of US$980 an ounce.
Virgin Money UK PLC (ASX: VUK)
Shares in Virgin Money ended the week at $1.18, falling 9.9% during the week. There was no news out of Virgin Money last week to trigger the fall in the share price, however the company remains exposed to the economic downturn caused by coronavirus.
Virgin Money offers credit cards, home loans, superannuation and insurance products, including travel insurance. Sales of its travel insurance products have no doubt declined and will remain depressed for the foreseeable future. Investors are likely also concerned about the prospect of rising defaults on Virgin’s credit card and loan offerings.
With rising unemployment, mass mortgage defaults are an increasing concern. Some analysts have predicted a property market crash of up to 20%. The big four banks have agreed to provide struggling mortgagors with repayment holidays of up to six months. No doubt there will be pressure on smaller home lenders such as Virgin Money to do the same.
In the meantime, those out of work may need to use their credit cards to meet basic living expenses, with no clear way of meeting repayments. Many of the newly unemployed will also have entered the coronavirus crisis with credit card debt, which they now may struggle to repay.
News Corporation (ASX: NWS)
News Corporation shares ended the week down 9.5% at $13.30. Investors have been shying away from media and advertising companies due to the downturn in the advertising market.
The advertising market was already declining before coronavirus hit. In February, total bookings declined 5.3%, the 18th month in a row in which a fall was recorded. Newspaper advertising has declined rapidly since the onslaught of coronavirus. News Corporation has decided to suspend print editions of 60 newspapers in Australia as a result.
Online editions of papers will continue for now, with News Corporation’s Australian Chairman Michael Miller telling the Financial Times, “during this unprecedented time it is imperative that we reduce costs while continuing to keep the community informed.” Miller blamed restrictions on the property market and the closure of restaurants and other venues for the steep decline in advertising revenue.
Unibail-Rodamco-Westfield (ASX: URW)
Unibail shares fell 9.2% last week, finishing the week at $4.32. Unibail is a commercial property company operating shopping centres, office and convention centres.
In its annual report released last week, Unibail advises that most shopping centres in countries where the company operates have been closed or substantially closed. Unibail advised that it was too early to determine the impact on the contractual obligations of its retailers and to estimate the effect of any case-by-case support measures it may offer tenants.
Unibail has started an active dialogue with tenants and has already granted additional delays for paying rents. The company is reducing administrative expenses and deferring non-essential capital expenditure as well has taking precautionary measures to ensure access to liquidity.
Last week Unibail placed 1.4 billion euros of bonds. Proceeds will be used to refinance debt maturing in 2020 and extend the group’s debt maturity. Upon closing of the bond offering the Unibail will have 11 billion euros in cash on hand and undrawn credit lines.
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Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Crown Resorts Limited, Sydney Airport Holdings Limited, and Webjet Ltd. 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.