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NZ shares bounce from omicron sell-off

New Zealand's main share index rose as investors shook off the sense of panic over a potential dangerous covid variant and as the MSCI equity indices completed their quarterly rebalancing.

Tuesday, November 30th 2021, 7:16PM

by BusinessDesk

The S&P/NZX 50 Index bounced 187 points, or 1.5%, to 12,718.91, recouping almost all the lost ground since Friday. Turnover was $897 million, due to the portfolio rebalancing.

Jeffrey Halley, a market analyst at Oanda, said investors had stepped in to “buy the dip” overnight as some judged the reaction to omicron had been overdone.

“It hasn’t been a complete reversal by any means, as the world settles into a choppy holding pattern,” he said.

BNZ strategist Jason Wong said the fear that enveloped markets late last week had subsided a little but wasn’t gone altogether. 

“Omicron will remain in the spotlight for several weeks, as investors take bets on how much damage it will do to the world economy,” he said

Analysts at Morgan Stanley were optimistic, saying in a research note the economic impact might not be as severe as with delta because governments were now using more targeted lockdowns.

The quarterly reset of the MSCI indices increased volume in the local market’s rebound, with larger NZ stocks trading at elevated levels. 

Meridian Energy led the index higher, climbing 5.8% to $4.75. Spark New Zealand rose 5.6% to $4.60 and Argosy Property was up 4.6% at $1.48.

Smaller stocks also did well, media company NZME jumped 6.8% to $1.41, software company Gentrack climbed 5% to $1.89, and Asset Plus was up 5% at 31.5 cents.

Travel stocks didn’t get the same enthusiastic recovery as other sectors, but Auckland Airport managed to make a 1.5% gain to $7.90.

Macquarie gave the stock a $8.62 target price citing its “resilient business model” and “flexible business plan capable of leveraging the inevitable recovery”.

Its forecast model assumes passenger numbers will recover to pre-covid levels by 2025 but admitted that was just a best guess. 

“Concerns over the emerging variant of covid reinforce the point that this issue is far from over, and that forecasts come with a high degree of risk,” they said. 

Air New Zealand and SkyCity Entertainment Group both fell 0.7% to $1.52 and $3, respectively.

The New Zealand Refining Company dropped 1.1% to 87 cents per share after raising $39 million at that price to fund private storage services.

The NZ dollar dropped again, trading at 68.17 US cents this afternoon, down from 68.24 cents yesterday.

The emergence of omicron prompted a risk-off move that pushed the kiwi below 68.05 cents and even touched 67.88 cents at one stage.

Tags: Market Close

« Omicron ordeal knocks NZ index 200 pointsOmicron and inflation risks flatten share market »

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