by BusinessDesk
The S&P/NZX 50 Index rose 5.21 points, or 0.04 percent, to 11,802.29. Within the index, 28 stocks rose, 15 fell and seven were unchanged. Turnover was $162.2 million.
Electricity stocks surged after Prime Minister Jacinda Ardern said she would offer Rio Tinto a discounted transmission price to keep the Tiwai Point aluminium smelter open for another three-to-five years.
Meridian Energy — which owns the Manapouri power station supplying the smelter — jumped 6.6 percent to $4.955.
“That announcement added 30 cents to the share price of Meridian pretty quickly” said Peter McIntyre, an investment adviser at Craigs Investment Partners.
“It allows time for reorganisation of power from the South Island to the North, which is pretty significant.”
Mercury NZ gained 7.4 percent at $5.09, leading the market higher. Contact Energy rose 6 percent to $6.65 and Genesis Energy was up 2.8 percent at $2.955.
The sector’s rally helped the index recover from steep losses after A2 Milk Co plunged 9.7 percent to $16.65 after warning first-half revenue could fall as much as 10 percent because of disruption to the daigou trade with the Australian state of Victoria in lockdown.
It is a reversal of fortune for the dairy exporter, which has been one of the biggest winners during the pandemic. The stock has now fallen more than 20 percent from its August high of $21.56 and is up just 11.2 percent year-to-date.
Jeremy Sullivan, an investment adviser at Hamilton Hindin Green, said the drop was larger than might be expected as it provoked existing fears of Australasian exports into China drying up.
“I do think it is a little bit short sighted to be perfectly honest, they are still growing their revenues year on year,” he said.
Synlait Milk fell 7.4 percent to $5.60, its fortune tied to its biggest customer, despite today announcing progress in reducing its dependency on A2 Milk.
In its annual result this morning — showing a 9 percent decline in profit — Synlait said it is finalising a long-term supply agreement with a new multinational customer.
Sullivan said the company was facing a “glut in supply and a slackening of demand” while in the process of increasing its production capacity.
“Logistically it is a perfect storm for that company, which ultimately they will work through, but it’s not going to happen overnight,” he said.
Pushpay Holdings rose 1.7 percent to $8.75, adding to an almost 9 percent gain across last week, although it has been trading in an $8-to-$9 range since mid-June.
In currency markets, the US dollar held near two-month highs as investors embraced the greenback following a selloff in equities.
Today there was little change, with the kiwi dollar trading at 65.59 US cents at 5pm in Wellington, down from 65.64 cents on Friday.
The trade-weighted index was at 71.18 at 5pm, from 71.16 on Friday. The kiwi traded at 92.93 Australian cents up from 92.86 cents, 69.09 yen from 69.16 yen, 56.36 euro cents from 56.24 cents, 51.35 British pence from 51.43 pence, and 4.4733 Chinese yuan from 4.4750 yuan.
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