NZ shares outperform Asia as blue chips bounce back

New Zealand’s share market outperformed Asian bourses as blue-chip stocks Meridian Energy and A2 Milk bounced back from recent weakness, and a weaker kiwi underpinned exporters including Fisher & Paykel Healthcare.

Tuesday, December 22nd 2020, 7:00PM

by BusinessDesk

The S&P/NZX 50 Index advanced 234.95 points, or 1.9 percent, to 12,842.69. Within the index, 30 stocks rose, 14 fell, and six were unchanged. Turnover was $208.3 million.

New Zealand’s bourse was a bright star among Asian stock markets, with most in the red as investors fretted over the new strain of covid-19 threatening to derail the global recovery with a new round of lockdowns.

“We’re one of the only markets in Asia that are up – across the Tasman resources are not doing particularly well,” said Peter McIntyre, an investment adviser at Craigs Investment Partners.

“Our dollar is weaker and we’re up.”

The kiwi dollar was whipped around in a 2 US cent range during the past day as the covid fears combined with support for the greenback after US legislators cut a deal on a covid stimulus bill.

The NZ dollar traded at 70.62 US cents at 5pm in Wellington from 70.94 cents yesterday, while the trade-weighted index was at 73.71 from 74.02.

The kiwi traded at 73.02 yen from 73.32 yen yesterday, 93.36 Australian cents from 93.66 cents, 57.75 euro cents from 58.21 cents, 52.66 British pence from 53.11 pence, and 4.6248 Chinese yuan from 4.6461 yuan.

Exporters

F&P Healthcare – which benefits from both a weak currency and covid-induced demand for breathing respirators – rose 3.6 percent to $33.92, whereas those travel and tourism stocks hit hardest by the pandemic were weaker. Air New Zealand posted the day’s biggest decline, down 3.1 percent at $1.715. Tourism Holdings slipped 0.8 percent to $2.54 and SkyCity Entertainment Group was down 1.6 percent at $3.16.

Exporter A2 Milk rose 5 percent to $11.49, recouping some of its recent weakness since downgrading earnings guidance due to the slowdown in the daigou trade.

McIntyre said a lot of investors had taken short positions in A2 – betting the stock would go lower – but that has since unwound with the shares seen as cheap and potentially a takeover target.

“A2 has rebounded significantly after that earnings downgrade,” he said.

Synlait Milk, which counts A2 as its biggest customer, was unchanged at $4.85 having also downgraded its guidance yesterday.

Utilities

Meridian Energy was another company to recover from a sharp selloff, up 2.9 percent at $6.70, as investors shrugged off the Electricity Authority’s finding that a unique set of circumstances led to an undesirable trading situation in December last year, where wholesale power prices didn’t fall as much as they should have.

McIntyre said Meridian has been pushed around by demand from exchange-traded funds with a sustainable focus which have been attracted to the power company’s renewable energy portfolio.

Other power companies were also stronger today. Mercury NZ rose 4.8 percent to $6.35, Trustpower increased 2.6 percent to $7.90, and Genesis Energy was up 0.7 percent at $3.52. Contact Energy was unchanged at $8.30.

Kathmandu rose 2.4 percent to $1.26, joining a rally among retailers after The Warehouse reported strong first-quarter sales. The operator of the ‘Red Shed’ retail network widened gross margins and said it will repay the wage subsidy. Its shares jumped 7.1 percent to $2.73, while clothing chain Hallenstein Glasson was up 3.4 percent at $6.70.

Pacific Edge led the market higher, up 7.9 percent at $1.23. The bladder cancer test maker yesterday pointed to a review by the Canterbury District Health Board supporting the use of the device. The stock has been on a tear since it secured two major commercial deals in the US, and is the strongest performer on the exchange, up 925 percent so far this year.

Tags: Market Close