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The Markets

Heavyweight stocks drag market down

New Zealand’s benchmark share market index fell for a second day as investors continued to sell off its two biggest stocks from record highs. Mercury NZ led the market lower.

Thursday, August 20th 2020, 7:14PM

by BusinessDesk

The S&P/NZX 50 Index fell 89.13 points, or 0.8 percent, to 11,662.16. Within the index, 18 stocks rose, 27 fell and five were unchanged. Turnover was $173.5 million.

Fisher & Paykel Healthcare continued to drag the market lower as some large shareholders cashed in profits following it soaring to a record high after upgrading its earnings guidance on Tuesday. Its share price fell a further 2 percent to $34.99, just above Monday’s closing price of $34.90.

A2 Milk Company also continued to decline, falling 1.9 percent to $19.96, as investors corrected the stock’s valuation after overestimating its earnings result on Wednesday.

“The market is still digesting results over the past few days, which is being reflected in those two share prices,” said Sam Trethewey, portfolio manager at Milford Asset Management.

These two stocks make up roughly 30 percent of the index and drove the its decline over a mostly positive set of earnings results announced today.

SkyCity Entertainment Group revised its earnings guidance to account for a higher insurance pay out from the Auckland convention centre fire, but said this would be partly offset by an impairment charge on the company’s Adelaide casino. Shares in the casino operator rose 2.5 percent to $2.51.

Genesis Energy said it is expecting to deliver on its $400 million operating earnings target this year—barring any material one-off events—causing its shares to rise 1.8 percent to $2.87 as investors looked through a 4 percent earnings decline in the year just passed.

Trethewey said battle lines were being drawn as each electricity firm put forward a case for why they will be best positioned in a post-Tiwai Point smelter market.  

“The difficult thing for investors at the moment is that everyone is talking their own book,” he said.

Mercury posted the day’s biggest fall, dropping 3.4 percent to $4.995, as it gave back some gains following its own earnings result jump on Tuesday.

Ebos Group lifted annual net profit 18 percent on the back of strong performances from both its human and animal care businesses but said the outlook remains uncertain because of the coronavirus crisis. Investors took an optimistic view and pushed the share price up 0.9 percent to $22.10.

Investors were also happy to look through Auckland International Airport’s report of a 63 percent drop in net profit and prediction international travel won’t recover for more than three years. Shares in the airport climbed 0.9 percent to $6.45.

“It is a weak result, as expected, but the market is very much willing to look through the short term and focus on its longer-term position as a monopoly asset,” Trethewey said. 

Australia & New Zealand Banking Group dropped 2 percent to $20.09. UBS analyst Jonathan Mott today criticised the bank’s decision to pay investors a dividend during “the deepest recession in a lifetime”.

“With 12 percent of mortgages and 14 percent of business loans still on repayment deferral, we question whether this is prudent," Mott said.

Westpac Banking Corp, which did suspend its dividend this week, fell 0.8 percent to $18.79.

The US dollar regained some strength overnight as US Federal Reserve meeting minutes under-delivered on dovish expectations

“The NZ dollar has done better than most, even as it has slipped back below the 0.66 mark,” said Jason Wong, a senior market strategist at BNZ, in a note this morning.

The kiwi dollar was trading at 65.62 US cents at 5pm in Wellington, down from 66.02 cents yesterday.

The trade-weighted index was at 71.04, down from 71.23 yesterday. The kiwi traded at 91.35 Australian cents from 91.23 cents, 69.57 yen from 69.68 yen, 55.38 euro cents from 55.33 cents, 50.09 British pence from 49.86 pence, and 4.5421 Chinese yuan from 4.5696 yuan.

Tags: Market Close

« Investors hit pause on market rally. Find out why.NZ shares rise on bullish earnings »

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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 - - - -
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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
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SBS Bank Special - 2.55 2.69 2.75
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 2.79
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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

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