Sharemarket tells of unequal pain
The smoke and mirrors of the post-Covid economic recovery continue to confound. A soaraway stockmarket seemingly untethered to the reality of rising jobless figures and a contracting GDP confirms that the pandemic has deepened existing inequalities.
A Sunday Star-Times investigation (page 18-19) lays bare the challenges faced by the newly unemployed, with 37,500 New Zealanders signing on last month alone.
All of which makes the sea of green on the NZX – Friday’s dip aside – difficult to reconcile. Investors are rewarding companies for making stinging cutbacks (even if it gets them a telling-off from the prime minister).
Air New Zealand has attracted much of the attention of this divide; its poor handling of customer refunds and severe redundancy numbers bears little relation to the bounce its share price has been enjoying of late.
Take Waitomo Caves, which prior to the pandemic was a bustling tourist attraction.
On a recent family trip there, our group of eight made a lonely sight on the vast landing area outside the ticket booth, as we waited for the 2:30pm tour to begin.
Eventually, a few others showed up, mainly overseas travellers and students who had been stuck here during lockdown.
After descending into the cave system, our guide Huia, the great-grandson of one of the first explorers of the caves, Tane Tinorau, sang a beautiful waiata for us. Normally, he explained, there’d be four large groups backed up in the cave’s cathedral, but there were just the 16 of us to soak up the magnificent acoustics.
It’s a stunning, peaceful, place, and if you haven’t been there yet, there will probably never be a better time to experience it.
Discover Waitomo, the company that runs the caves, is operated by publicly-listed Tourism Holdings, which recently laid off 140 staff. Discover Waitomo recently received an emergency $4 million injection from the Government as it was deemed a strategic tourism asset.
This will hopefully secure its future viability. It’s certainly helped to shore up investor confidence. Tourism Holdings’ share price fell to a low of 55 cents as the country went into lockdown in March, and even without the prospect of international visitors any time soon, it has regained most of its virus-inflicted losses, closing on Friday at $2.31.
Many investors are ebullient that a vaccine will see a return to pre-pandemic economic activity, that governments will keep their coffers open for as long as it takes to stimulate growth, and the markets will continue on their merry way.
Another view is that investors are deluding themselves in a ‘‘perfect storm of stupid’’, as US investment commentator Linette Lopez put it.
Writing today in the Star-Times, Finance Minister Grant Robertson warns of more difficult times ahead.
He says the Government is working hard to bring tourists back safely. But it is likely to be years before tourism levels return.
Spare a thought for those staff who only months ago were negotiating the glow-worm caves at Waitomo and now find themselves navigating the Work and Income website, while watching their former employer’s share price climb ever higher.
Another train of thought is that investors are deluding themselves.