The change of ownership of one of NZ’s leading media companies, Stuff Limited, has hit the headlines recently. NZME, owner of NZ Herald and several radio stations, were in talks to buy Stuff for $1.00 from Stuff’s parent company, ASX listed Nine Entertainment. When talks broke down shambolically the matter ended up in court, NZME lost and the result was a management buyout at the $1.00 price which was earlier touted by NZME.
The media being the subject matter of a story rather than reporting on the story is the exception to the rule. This has been exhibited in their reporting on pullbacks on the NZX50, exhibited in the image below.
Arrows highlight recent NZX50 market pullbacks.
On the first two occasions a sharp fall has been followed by a protracted recovery. During these pullbacks the media highlighted the loss in value of both local and global equities and the revivals that followed received little coverage. Was the coverage of the COVID-19 crisis any different? No is the short answer, “Coronavirus wipes $5 billion off NZ stock market” and “ANZ economist’s stark warning after billions of dollars wiped off stock market” are two of many easily searchable headlines that can be found when scrolling stock market news for the month of March. On the nightly news after running through the health-related concerns of COVID-19, the news would pivot to losses equity investors were facing on almost a daily basis. There was also a healthy amount of coverage on declining Kiwsaver portfolio values.
This created investor jitters which climaxed the Monday NZ’s Prime Minister, Jacinda Ardern, announced NZ would be going into Level Four the following Thursday. Since the start of Level Four the NZX50 has gained back most of its losses and now lies within 10% of its all-time high, which was reached in February this year. We have heard very little on this – one can only conclude negative headlines gain wider readership and more clicks than balanced reporting. The moral of the story is that investors should not be swayed by noise created by the media as it generally only goes one way and should focus on market fundamentals and their own guiding principles.
This article reflects general views and opinions of Maxim Financial Markets Limited at the time of publication. Nothing within the article should be relied upon as a basis for making any investment decision. Please contact us to seek specific investment advice before making any investment decision. A Financial Advisor disclosure statement is available upon request.