Australian sharemarket climbs higher, ‘perverse’ logic behind massive buy now pay later moves

The ASX gained ground, with massive spikes in buy-now-pay-later stocks as euphoria from one company’s deal spread through the sector.

The Australian sharemarket climbed higher, with gains seen in most sectors while buy now pay later stocks rocketed. Picture: NCA NewsWire/Christian Gilles

The Australian sharemarket climbed higher, with gains seen in most sectors, while buy-now-pay-later (BNPL) stocks rocketed, seemingly on the back of one company’s enormous spike.

The S&P/ASX200 finished 0.91 per cent higher at 6868.9 while the All Ordinaries Index rose 0.97 per cent to 7149.7.

In the booming BNPL sector, Zip Co soared 16.9 per cent to $12.66, Sezzle leapt 7.29 per cent to $11.63, Laybuy jumped 7.9 per cent to $1.43 and market leader Afterpay added 1.59 per cent to $154.15.

ThinkMarkets Australia analyst Carl Capolingua said the moves came after IOUpay, which offers BNPL, mobile banking and digital payments, skyrocketed 59.09 per cent to 70 cents.

The company copped a speeding ticket after its shares reached 85 cents in intraday trade, with ASX Compliance noting they were just 22 cents last week.

IOUpay responded by saying shareholders could be “price-factoring” in its February 9 announcement of a tie-up with Malaysian online retailer Easystore, supplying BNPL services to its 7000-odd merchants.

It appears euphoria around an IOUpay deal eventually spread throughout the BNPL sector, with Zip taking off in particular. Picture: Derek Rose/AAP

“But that’s been in the market for days — it’s not news anymore,” Mr Capolingua said.

“In a perverse kind of way, the euphoria in IOU appeared to spread to the other BNPLs.

“IOU cited price increases in Afterpay and Zip Co as justification for their own rally. Then it looked like the others then took off in some sort of crazy bout of circular logic.

“These are massive moves, and not one of those companies had any news of their own today.”

Outside BNPL, investors were targeting value and cyclical stocks like banks, retail and commodity stocks, Mr Capolingua said.

“The shenanigans in the BNPL space overshadowed a very sound performance in the broader market … only property and utilities missed out,” he said.

“There’s nothing specific to explain the strength today; it’s all about macro-fund flows, cheap money and bullish sentiment.”

Bendigo and Adelaide Bank surged 11.28 per cent to $10.56 after booking a 67.3 per cent leap in half-year statutory net profit, a result OpenMarkets Group chief executive Ivan Tchourilov said was better than expected.

Bendigo and Adelaide Bank’s results were warmly received by the market. Picture: Kelly Barnes/AAP

“This is a good result for them as there have been a few question marks around the regional banks and how they’ve fared during the pandemic,” Mr Tchourilov said.

“It’s a positive for the lending space as a whole and indicates the domestic recovery is gathering momentum.”

ANZ lifted 1.61 per cent to $25.22, National Australia Bank put on 1.44 per cent to $25.29 and Westpac improved 1.17 per cent to $22.40 but Commonwealth Bank eased 0.65 per cent to $86.31.

Rio Tinto firmed 1.83 per cent to $119.50, BHP appreciated 2.3 per cent to $45.75 and Fortescue gained 2.52 per cent to $24.43.

Entertainment products retailer JB Hi-Fi, which also owns The Good Guys, chalked up a record half-year performance, with net profit surging more than 86 per cent to $317.7m after total sales rose by almost 24 per cent to $4.9bn.

Shares in the group gained 3.05 per cent to $52.44.

JB Hi-Fi says the sales momentum continued into January. Picture: NCA NewsWire/Joel Carrett

Rival Harvey Norman put on 3.42 per cent to $5.74.

Seven West Media advanced 6.38 per cent to 50 cents after becoming the first big media company to strike a deal to provide news content to Google Showcase, which launched in Australia early this month.

The company said that was subject to executing a long form agreement within the next 30 days.

“Their outstanding leadership on the implementation of the proposed News Media Bargaining Code has resulted in us being able to conclude negotiations that result in fair payment and ensure our digital future,” Seven West chairman Kerry Stokes said.

Coca-Cola Amatil was up 2.13 per cent at $13.41 after Coca-Cola European Partners sweetened its takeover offer from $12.75 to $13.50, valuing the company at about $10 billion.

The Aussie dollar was buying 77.82 US cents, 56 British pence and 64.12 Euro cents in afternoon trade.