tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Saturday, September 26th, 8:20AM

Investments

rss
The Markets

NZ shares fall as the risk of global pandemic rises

New Zealand shares joined a global rout after the spread of coronavirus cases outside China caused stocks across Europe and the US to plunge as investors sought to avoid the risk of a global pandemic.

Tuesday, February 25th 2020, 6:08PM

by BusinessDesk

The S&P/NZX 50 Index declined 137.89 points, or 1.2 percent, to 11,719.23. Within the index, 43 stocks fell and seven gained. Turnover was $186.4 million, with just four stocks trading on volumes of more than a million shares.

New Zealand's benchmark index dropped as much as 3.4 percent, following a weak lead from Wall Street where the three largest indices closed between 3.4 and 3.7 percent lower.

Investors aggressively sold off shares as they re-evaluated the risk posed by covid-19 following an increase in the number of infections outside China.

Greg Smith, head of research at Fat Prophets, said the spread of the virus into Europe lent validity to the fear the virus was becoming a pandemic.

“The concern here is that it has spread outside of China, rather than being contained in that region,” he said.

“The ‘p-word’ is increasingly coming into the lexicon, after it was mentioned by the World Health Organisation yesterday, who said it is not a pandemic yet, but it could become one.”

Summerset Group led the market lower, down 8.1 percent at $8.32 on a volume of 2 million shares. It said it isn’t expecting any underlying growth this year due to rising expenses and falling margins.

The retirement village operator and developer said its full-year underlying net profit for calendar 2019 was $106.2 million, up slightly from $98.6 million in the prior year.

“That was a weak result and markets are certainly in no mood for it on a day like today. With headwinds on the bottom line, increased wages coming through and weaker development margins and generally weaker outlook, it is no real surprise investors have reacted harshly,” Smith said. 

Tourism stocks were hit hard in the sell-off, as they are most affected by efforts to contain the contagion. 

“Countries could potentially be stepping up travel bans and monitoring people coming in and out, people will be putting off taking trips. So, tourism and travel are going to be the initially most affected,” Smith said. 

Air New Zealand fell 4.3 percent to $2.47 on a volume of 1.9 million shares, Tourism Holdings declined 2.6 percent to $2.65 and Auckland International Airport fell 1 percent to $8.24 on a volume of 1.9 million shares.

“Air New Zealand has already suspended flights to South Korea, this is going to be more and more of a headwind.” Smith said. 

Mercury NZ decreased 0.8 percent to $5.36 as it trimmed its full-year earnings guidance by $10 million, due to dry weather emptying out hydro-electric water storage in the North Island. Vector, who also reported flat earnings today, fell 2.7 percent to $3.23.

Smith said these energy stocks were generally considered defensive stocks, so were less likely to be caught up by the negative sentiment.

“They should, in theory, hold up better in a sell-off, but their valuation has been getting pretty high and these are flat outlooks,” he said. 

Pushpay Holdings, which generates most of its revenue in the US, dropped 2.4 percent to $4.15, and fruit exporter Scales Corporation fell 0.7 percent to $4.27.

Chorus rose for a second day after yesterday signalling plans to pay bigger dividends, rising 2.4 percent to $6.89.

A2 Milk rose 1.5 percent to $15.86 on a lighter volume of 772,000 shares. The company will report its annual result on Thursday and Smith said some investors were buying in ahead of that result.

“It’s a ringing endorsement that on a day like this it can nudge up a couple of percent,” Smith said.

“It remains to be seen if it is warranted as there is certainly risk since China is a primary market for A2.”

Outside the benchmark index, online travel booking company Serko today said over the past week it has seen a drop-off in bookings due to coronavirus. The stock dropped 6.3 percent to $4.30.

Tags: Market Close

« NZ shares tank following sudden spread of covid-19Pandemic fears drive NZ shares lower for a second day consecutive day »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

AM Update - Your morning business news update

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.15 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 3.85 3.95 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 ▼2.45 2.65 2.79
Kainga Ora 4.43 2.93 3.07 3.24
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
SBS Bank 4.54 3.05 3.19 3.25
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 2.55 2.69 2.75
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 3.29
TSB Bank 5.34 3.29 3.45 3.59
TSB Special 4.54 2.49 2.65 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.15 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.00 3.13 3.02

Last updated: 21 September 2020 10:48am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com