Travel stocks drop as trans-Tasman bubble deflates

Travel stocks led the New Zealand stock market lower after the trans-Tasman bubble was paused due to a worsening covid outbreak in Australia that could lead to extended lockdowns.

Monday, June 28th 2021, 6:50PM

by BusinessDesk

The S&P/NZX 50 Index fell 22.34 points, or 0.2%, to 12,603.75 with most stocks in decline. Turnover was $129 million.

Greg Smith, head of research at Fat Prophets, said investors were reacting to the "high-profile” outbreak in various Australian states.

Six states and territories are facing covid-19 outbreaks and the NZ government elected to block all quarantine-free travel from Australia for at least three days. 

“The fact that it’s a complete closure has resulted in some investor angst,” Smith said.

“It’s a reminder that the virus is still with us and a reminder that we are behind on the vaccine rollout as well.”

Air New Zealand shares fell 2.5% to $1.54, with media reporting they had been forced to cancel 89 trans-Tasman flights scheduled between Saturday and Wednesday.

Auckland International Airport dropped 2.2% to $7.23, but Tourism Holdings was the worst hit stock, falling 3.8% to $2.52.

The outbreak has come at a critical time for the industry, with Australian school holidays and NZ ski season having just started.

Other stocks affected by covid restrictions also declined: SkyCity Entertainment was down 0.9% at $3.40, A2 Milk fell 1.6% to $6.64, and Restaurant Brands sank 2.1% to $14.00.

Corporate travel booking software firm Serko slipped 2.4% to $7.61. It is less sensitive to the travel bubble but earns a chunk of its revenue from regional travel within Australia.

Losses on the index were balanced out by some strong gains among a minority of stocks.

Fisher & Paykel Healthcare climbed 1.7% to $31.88. Smith said investors on both sides of the Tasman were rotating back to covid-safe stocks. Mainfreight also climbed 1.4% to $76.55.

Precinct Properties jumped 3.3% to $1.59. The Accident Compensation Corporation today revealed it had bought $31m of stock since February and now holds 5.2% of the property investor.

Outside the NZX 50, Wellington Drive Technologies surged 15.9% to 9.5 cents after it raised revenue guidance by US$5m which will boost underlying earnings by a third assuming an exchange rate of 70 US cents during the second half of 2021.

The kiwi dollar was trading at 70.68 US cents at 3pm in Wellington, down marginally from 70.71 cents last week.

The trade-weighted index was at 74.32 at 3pm, from 74.33 on Friday. The kiwi traded at 93.22 Australian cents from 93.16 cents, 78.24 yen from 78.42 yen, 59.27 euro cents from 59.21 cents, 50.92 British pence from 50.75 pence, and 4.5664 Chinese yuan from 4.5715 yuan.

Tags: Market Close

« Kiwi, stocks bounce back from Fed scareNZ shares rise as tourism stocks recover »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

© Copyright 1997-2021 Tarawera Publishing Ltd. All Rights Reserved