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NZ shares soar as investors get FOMO

New Zealand shares rose as investors found confidence in the Prime Minister bringing forward a decision about the move to alert level 1. Tourism Holdings and Gentrack led the market higher with double digit gains.

Tuesday, June 2nd 2020, 6:25PM

by BusinessDesk

The S&P/NZX 50 Index rose 151.76 points, or 1.4 percent, edging back across the 11,000 mark at 11,034.17. Within the index, 36 stocks rose, eight fell, and six remained unchanged. Turnover was $159.3 million.

Investors took on a confident attitude after Prime Minister Jacinda Ardern this morning signalled New Zealand could be out of alert level 2 as early as Wednesday next week.

Level 1 would be a return to life as normal — albeit with the border still closed — clearing the path for economic recovery from the shutdown which stamped out the virus.

Fear of missing out on the recovery has led investors to buy into stocks that have lagged behind in an attempt to join the last of the bounce back.

Greg Smith, head of research at Fat Prophets, said some investors had been building up liquidity while waiting for a second market correction before buying in.

“There is probably a little bit of FOMO coming through now,” he said.

“A lot of deleveraging took place in March and there will be many in the market who have been waiting for the next leg back down, which hasn’t happened.”

With the outlook seemingly stabilising, some investors may have lost patience and bought into the market before it climbs any higher.

Last week the NZX50 rose 2.1 percent and has gained 7.6 percent over the last 12 months. The benchmark now sits less than 9 percent below its February record.

Stocks that have lagged behind the recovery found support on the market today.

Tourism Holdings led the market higher, rising 11.9 percent to $1.97 and paring its fall year to date to 43.5 percent.

Smith said the market had been responding favourably to the restructuring which is underway and received an extra boost from the news the company had sold out of campervans over Queen’s Birthday weekend. 

Gentrack rose 11.9 percent to $1.60 as investors continued to process its half-year report, released on Friday. The company noted a hit to earnings but said they were expected to improve in the second half of the year. Investors with a new-found appetite for risk were happy to take that bet.

Vista Group International climbed 9.3 percent to $1.64, still just half what it was in February. Smith said they haven’t had the same scale of recovery that others have and were seeing some catch up.

SkyCity Entertainment Group increased 7.4 percent to $2.62, Air New Zealand rose 2.2 percent to $1.40 and Auckland International Airport advanced 1.5 percent to $6.60 — all stocks that were hit hard by the shutdown.

Refining NZ was the weakest performer in May, falling 23.9 percent. Today the stock clawed back some of those losses, rising 2.3 percent to 73 cents.

Synlait Milk jumped 9.2 percent to $7.10, bouncing straight back from an aggressive decline on Friday. A2 Milk Company fell 1.6 percent to $18.70.

Ryman Healthcare increased 9.5 percent to $13.25, Metlifecare rose 3.3 percent to $4.33, Summerset Holdings advanced 2.5 percent to $6.15 and Oceania Healthcare gained 1.1 percent at 90 cents. Each of these retirement operators are sitting approximately 30 percent lower this year.

Westpac Banking Corp posted the day’s biggest loss, falling 2.1 percent to $18.60.

Tags: Market Close

« NZ shares outperform weaker global marketsInvestors eye covid recovery »

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