NZX50 limps into Labour weekend

The local stock market limped into the three-day weekend as investors try to decipher what the 90% vaccination target means for the wider economy.

Friday, October 22nd 2021, 7:06PM

by BusinessDesk

The S&P/NZX 50 Index fell 32.74 points, or 0.3%, to 13,093.24 in another relatively quiet session, with turnover of $154.7 million across the main board.

Investor sentiment was already unsettled with early worries about whether Chinese property developer Evergrande would make a payment deadline, which was paid this afternoon just before the 30-day grace period expired.

That came as some institutional investors shifted around their portfolios, with activity such as Arvida’s $330m capital raising and the upcoming Vulcan Steel initial public offering requiring them to free up funds.

A2 Milk posted the day’s biggest decline on the top 50 index, falling 4% to $7.01. Investors had been regaining some lost confidence in the milk marketing firm until a second class action came out of the woodwork yesterday.

Domestically, the government’s new traffic light covid management system and 90% vaccination targets were keenly awaited, although investors are still digesting what it means for the economy.

Stuart Williams, head of equities at Nikko Asset Management, said it was good to see the government provide much-needed cashflow to small and medium-sized businesses, and grapple with what a 90% vaccination rate might mean.

“In the event it was possible, it could be a positive for New Zealand as that highly vaccinated rate means you don’t suffer the sorts of wider constraints long term,” Williams said.

Among those most exposed, Tourism Holdings fell 3.4% to $2.60, SkyCity Entertainment Group declined 2.2% to $3.14, while Air New Zealand slipped 0.3% to $1.66. Auckland International Airport rose 2.7% to $8.07, posting the day’s biggest gain on the benchmark index.

Retailers were also broadly stronger, with Kathmandu up 1.3% at $1.61, Briscoe Group rising 2.9% to $7.20, and The Warehouse Group advancing 0.3% to $4.07.

Companies held for their reliable dividends remained under pressure with investors still uncertain whether the headline 4.9% inflation rate is transitory and something the Reserve Bank can look through in taking a longer-term view. Still, interest rates are expected to keep rising, reducing the allure of those yield stocks.

Stride Property fell 3.4 % to $2.30, Port of Tauranga was down 2.1% at $6.64 and Investore Property declined 1.6% to $1.86.

The NZ dollar dipped back below 72 US cents on the negative investor sentiment, which was a boon for exporters that have been under pressure due to its recent strength. Fisher & Paykel Healthcare increased 1.8% to $30.85, Rakon rose 2% to $1.56 and Scott Technology extended its gain after yesterday’s upbeat earnings result, rising 1.6% to $3.13.

NZ Rural Land Co increased 1.8% to $1.12 after saying it’s agreed to buy six Central Otago dairy farms for $61.4m, which it will pay for with existing cash and extending its debt facilities.

Wine exporters also gained today in the wake of yesterday’s free trade deal with the UK opening access for producers. Delegat gained 2.4% to $14.50 and Foley Family Wines was up 3.7% at $1.68.

Tags: Market Close