Bookings on hold: Air New Zealand shares weakened yesterday after the airline was forced to stop taking international bookings for the next three weeks to reduce the pressure on an already overburdened passenger quarantining process. Housing Minister Megan Woods said the airline had been asked by the Government to align daily arrivals with capacity at managed isolation facilities which it has agreed to. However the decision may require some passengers already booked to be moved to other flights. The Government is also talking to other airlines about managing flight schedules.
Numbers increasing: According to the most recent data 7,017 people will need to be in managed isolation or quarantine on July 11, more than the total planned capacity of 6,781 for the July 6-12 period. In the past three weeks, the Government has brought on 10 new facilities, expanding capacity for 2,000 more people and plans to scale this up even further in the coming weeks. More than 26,639 people have been through managed isolation and quarantine since March 26. Air NZ shares closed down 2.4 percent at $1.42.
Unlucky state: Victoria is now effectively sealed off from the rest of Australia with its state borders adjoining New South Wales and South Australia being patrolled by thousands of police and defence force personnel. Parts of Melbourne have been forced into a hard Level 4-style lockdown frustrating many residents in apartment blocks who are unable to leave their buildings after the state recorded 191 new cases of Covid-19 yesterday. Schools in affected areas will not reopen their doors again for term three next week as planned with hundreds of thousands of children required to go back to distance learning.
Nightmare scenario: Victorian Premier Daniel Andrews said the current situation was dire. “We know we’re on the cusp of something very, very bad if we don’t take these steps today.” He said without lockdown, it would become impossible to continue contact tracing at a sufficient level to suppress and contain the virus, which would “quickly spiral well and truly out of control”.
Back to Level 3: Retail businesses in Victoria will remain open subject to density limits, markets can open for food and drink sales only, and hairdressers will be allowed to remain open. Restaurants and cafes must return to takeaway and delivery services only, while beauty and nail salons will be forced to close as will entertainment and cultural venues. Victoria’s situation should serve as a warning to New Zealand how quickly the situation can escalate. In just two weeks the state has gone from less than 20 active cases per day to more than 160.
Green shoots: Robotics and automation specialist Scott Technology said it is seeing an uneven recovery in its global markets, with the Asia Pacific returning to normal more rapidly than in the US and Europe. In a market update, it said it expects earnings in the 12 months to August to face a material hit from the Covid-19 pandemic, including the cost of restructuring its global business. The company said while its results will be influenced by the pandemic, there are signals that revenue streams are returning to normal as a number of projects come back online.
Work pipeline refilling: CEO John Kippenberger said the company had recommenced work in Australia on an automated mine site lab for Rio Tinto’s Koodaideri iron ore project in WA and had also recently signed a contract for an automated refuelling system for monster mining trucks. It also had projects underway in China and North America where it said there is increasing demand for new robotic and automation given the “increased risks of Covid-19.” Investors responded positively to the update pushing Scott Technology shares up 9.1 percent to close at $1.80
Business is booming: Samsung, the world’s largest smartphone manufacturer said it expects its profit to increase more than 20 percent last quarter, suggesting the company has managed to withstand the fallout from the coronavirus pandemic. The South Korean conglomerate said it expects to make an operating profit of roughly 8.1 trillion won (NZ$10.5 billion) for the three months to June an increase of 23 percent on the same period a year ago. The company will report its full results for the second quarter at the end of this month.
Bellwether result: Samsung, which supplies key parts, including display panels and chips for companies such as Apple and Huawei, is among the first of the major tech companies to report earnings for the quarter. Its full report will be viewed as a bellwether for how the rest of the sector have withstood the pandemic.
Tech juggernaut continues: If anyone needed reminding of how powerful the US tech sector is these days in powering America’s economy, look no further than Monday’s trading action. Amazon shares topped the US$3,000 mark for the first time ever. The company is now worth more than US$1.5 trillion, joining Apple and Microsoft above that lofty level and propelling the Nasdaq to a new all-time high above 10,000. Google’s owner Alphabet also topped the US$1 trillion mark too. The four tech giants, along with Facebook, are now collectively worth a staggering US$6.4 trillion (NZ$9.8 trillion) or almost one third of America’s annual GDP.
New highs: Tech stocks have led the market’s stunning rebound from its March lows on expectations of continued strong sales and earnings growth — despite the fact that the US economy is now in a pandemic-induced recession. Shares of Netflix, Tesla, Square, PayPal, Nvidia, Zoom and Adobe all hit record highs on Monday.
On notice: The UK’s “big four” accounting firms have been told to “ring fence” their auditing operations as part of a drive to improve oversight of corporate finances in the wake of several recent high-profile collapses. The industry’s regulator, the UK Financial Reporting Council (FRC), told KPMG, PwC, Deloitte and EY that it expects them to have separated their auditing divisions from the rest of their operations by June 2024. The FRC issued the instruction amid a broader effort to overhaul the accounting profession that has led to three government-backed reviews but has yet to result in legislation. One recent review has even recommended that auditing be treated as a separate profession to accounting.
Overdue spend up: Legendary US investor Warren Buffett, who has resolutely stayed on the sidelines this year, has finally decided to part with some of his enormous cash pile acquiring the natural gas assets of Dominion Energy. The deal could spark a broader turnaround in sentiment for the so-called Oracle of Omaha. Buffet’s holding company Berkshire Hathaway confirmed it was spending nearly US$10 billion ($NZ15.4 billion) on the Dominion acquisition. Although the numbers sound impressive, the purchase equates to less than 8 percent of Berkshire’s current US$137 billion ($NZ210 billion) cash pile. Buffett would never win any prizes for being excessively acquisitive. The company’s last major deal was the purchase of aerospace parts maker Precision Castparts for US$37 billion (NZ$57 billion) in 2015.
