NZ shares settle down after rally, Fonterra units jump

New Zealand shares gave back some of yesterday’s sudden rally, following the whims of global markets with little local news to trade on.

Thursday, December 9th 2021, 6:53PM

by BusinessDesk

The S&P/NZX 50 Index fell 96.5 points, or 0.8%, to 12,771.83. Turnover was $139 million.

While this may be considered a fairly substantial movement on an average day, it was only a small piece of the more than 2% jump yesterday as investors got back into buying.

US markets consolidated overnight after bouncing more than 3% over the previous two sessions while global interest rates pushed higher.

The reason for the rally was widely credited to be reduced fear that the omicron covid variant would prove to be more disruptive than delta.

Importantly, Pfizer published results of lab tests suggesting a third booster shot would likely stave off the new variant, and even the standard two doses should protect against severe disease.

Many of the day’s largest falls on the local market were from stocks that had particularly strong gains yesterday.

Genesis Energy – which jumped 1.8% yesterday – dropped 2.8% to $2.91 today. Fisher & Paykel Healthcare fell 2.7% to $32.10, having jumped the same amount yesterday.

Serko declined 1.5% following yesterday’s 5% surge and closed at $6.80.

Sky Network Television rose another 1.7% to $2.40 as investors continue to re-price the stock after its massive cost-cutting exercise saw two days of double-digit gains.

Today, Vodafone announced it would axe its TV service in September next year and customers who watch Sky on its TV top box would be transferred to Sky from March.

These customers are currently included in Sky’s total streaming subscription numbers and once migrated will be reported as part of Sky Box customer and revenue numbers.

Fonterra Shareholders' Fund Units climbed 2.8% to $3.70 after the co-op's famer shareholders voted in favour of a new capital structure capping the fund at 10% of all co-operative shares.

The unit price has fallen from $5.14 in March to a low of $3.55 as the new rules are likely to result in a deep discount on the units due to liquidity restraints.

Head of research at Jarden, Arie Dekker said the capital structure changes were incrementally supportive of Fonterra’s competitive positioning for milk supply.

“Fonterra sees this additional flexibility as better positioning it to retain milk supply – something critical to its strategy and avoiding a situation where Fonterra ends up with stranded assets over time from more market share losses,” he said.

Sure enough, rival milk buyer Synlait Milk declined 4% to $3.33 – despite not getting much bounce yesterday – while A2 Milk was up 1.5% at $5.98.

The kiwi dollar was trading at 68.05 US cents today, recovering a little from 67.84 cents yesterday.

The market has taken a more optimistic view on China’s outlook, which drove the yuan to a higher and created positive spillover for the Australian and kiwi dollar, said BNZ strategist Jason Wong.

Tags: Market Close