November Newsletter
US elections, Stock of the month, company update and more

Since mid-October, the stock market has been a little tense due to NZ elections, US Elections and of course the on and off news regarding covid vaccines. So what exactly happens in the stock market when presidential elections take place?

To better understand, U.S. Bank analysts studied market data from the past 90 years and identified patterns that repeated themselves during election cycles. While these are predictions based only on historical data, this shows how these patterns might affect your portfolio.A review of market data for the S&P 500* since the 1930s revealed that on average, stock (equity) showed more muted performance in the year leading up to a presidential election than they did at other times.

Before elections...
In any given 12-month period, the analysts saw equities generally providing gains of about 8.5 percent — but in the year leading up to a presidential election, gains were less than 6 percent.

After elections...
Stock market returns tend to be slightly lower for the following year. It doesn’t seem to make much difference which party takes office, but it does matter whether control of the White House changes hands. When a new political party comes into power, the analysts found that stock market gains averaged 5 percent. When the same president is re-elected or if one political party retains control of the White House, returns were slightly higher, at 6.5 percent.

Impact on the market...
Keeping an eye on which sectors are most likely to be affected by the presidential election (like healthcare and technology) is smart. Individual sectors, such as healthcare, may see some real volatility as a result of the November election. The same is true for industries affected by trade and tax policy.

Stock of the month: Fisher & Paykel Healthcare

What does Fisher & Paykel Healthcare do?
Fisher & Paykel Healthcare (FPH) manufactures and sells medical devices and systems for use in acute and chronic respiratory care, surgery and in the treatment of obstructive sleep apnea. FPH manufactures their products at facilities in New Zealand (approximately 68%) and Mexico (approximately 32%) and sell these products in more than 120 countries worldwide. They market devices for both hospitals as well as homecare use.
Why is F&P Healthcare our Stock of the Month?
Fisher & Paykel Healthcare is our stock of the month due to their brilliant response to the Covid-19 pandemic. The company has now become the world’s largest manufacturer of two of the primary respiratory therapies used to treat patients admitted to hospital with Covid-19, Optiflow therapy and Nasal High Flow therapy. In January 2020 the company managed to identify the threat posed by Covid-19, long before the rest of the world including the World Health Organisation (WHO). Identifying the global pandemic threat posed by Covid-19 at such an early stage allowed the company to take the appropriate actions needed to be able to respond to the chaos and the inevitable surge in demand by hospitals for respiratory devices without putting additional strain on their manufacturing plants.

Anticipating this surge in demand, in January the company hired an additional 1500 factory workers (700 in Auckland and 800 in Mexico) and began to steadily increase the output of their hospital hardware products. Another thing that should be talked about is the high ethical standard the company has operated with during this pandemic. When most other companies would’ve increased their prices in line with costs in order to save the bottom line, FPH stood by the global community and did not increase their prices but rather chose to sacrifice some bottom line.

Recent stock news
On August 21, 2020, at its annual shareholders’ meeting, FPH announced that the company has commenced planning for its third manufacturing facility in Mexico. The facility is set to be commissioned within the next two years.
Financial record
1. Net profit after Tax (NPAT) of $287 million and Earnings Per Share (EPS) of 50 cents per share showed experienced growth of 37% from the previous corresponding period.

2. The company paid out a FY20 dividend of 27.50 cents per share to shareholders, up 18% on FY19.

3. Operating profit in FY20 was $379 million, up 30% from FY19.

4. The company expects that on this basis and at current exchange rates, full year operating revenue for the 2021 financial year would be approximately $1.61 billion and net profit after tax would be approximately $365 million to $385 million.
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Inside Investify...

  • What's happening?
Since last month, we have made good progress on perfecting the analytical insights we are using for Investify. We have also been engaging in some exciting new collaborations with our partners and are almost ready to launch the service. Meanwhile, early this month, Team Investify celebrated Diwali with a Samosa morning tea and some delicious Indian sweets. 
  • What's coming up?
You will receive another update from us when your free 14 day trial is ready for use (hopefully by Christmas!). We will give you plenty of resources to guide you through your Investify journey and ensure you make the most of your trial for researching stocks.
  • What can you do?

Stalk us on social media. Keep in the loop with our posts while we reach out to you with some cool facts, updates and news about the NZ financial markets.

Team Investify

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