NZ shares rally under shadow of Air NZ capital raising

New Zealand shares joined a global rally as investors grew increasingly optimistic about the prospect of peace in Ukraine, against the local backdrop of Air NZ’s upcoming billion-dollar capital raising.

Wednesday, March 30th 2022, 7:32PM

by BusinessDesk

The S&P/NZX 50 Index rose 179.34 points, or 1.5%, to 12,098.80. Turnover was $282.3 million across the main board, with Mercury NZ accounting for an unusually large $100.1m.

The local market was already following its international peers higher as investors took heart from positive talks between Russia and Ukraine, propelling stocks on Wall Street and Asia higher. The benchmark index got a tailwind after Air NZ halted trading of its shares at 4pm ahead of a briefing on its plans to raise what some analysts estimate would be about $1.1 billion.

The national carrier’s shares fell 1.8% to $1.375 with 2.3 million shares changing hands before trading was halted, in what ended up being the biggest fall of the day. Auckland International Airport rose 0.7% to $7.70.

“Air NZ’s capital raise has been talked about since covid began so it's certainly no surprise that they’ve finally announced it,” said Mark Lister, head of private wealth research at Craigs Investment Partners.

“There was a general expectation that now that the borders are starting to reopen and seeing restrictions ease and New Zealand has a bit more clarity on what their future looks like, which makes sense that they can get this out of the way and move on to the next phase.”

“We'll just have to watch with interest about what that looks like,” he said.

Healthcare and technology stocks led the gains in Australian and NZ markets, with the likes of NZ accounting software firm Xero and US location app maker Life360 among the strongest performers on the ASX

Eroad led the local market higher, climbing 9.9% to $4.43, extending its recent gain since extending a banking facility. The telematics software and hardware maker’s Australian business is also set to get a boost from the Australian federal government’s budget move to cut fuel taxes across the Tasman.

Logistics firm Mainfreight, which has substantial business in Australia, increased 2.9% to $84, while chemical manufacturer and logistics firm DGL Group advanced 1.2% to $3.52.

Fisher & Paykel Healthcare rose for a second day, up 4.3% at $24.83, as it recovers from last week’s sharp selloff on its downgraded earnings outlook. Biotech firm Pacific Edge advanced 4.3% to 97 cents.

The recovery in investor sentiment over the possibility of the end of Russian hostilities supported a recovery in risk-sensitive currencies such as the NZ dollar, which climbed to 69.47 US cents at 3pm in Wellington from 68.92 cents yesterday. The trade-weighted index advanced to 74.63 from 74.28.

That strength in the currency didn’t weigh on exporters, which joined the widespread rally, with fruit exporter Scales up 4.1% at $5.14, rubber goods maker Skellerup advancing 4% to $5.93, honey products maker Comvita climbing 3.9% to $3.48, and seafood group Sanford up 3.2% at $4.78.

Genesis Energy rose 1.4% to $2.86 after it was cleared of wrongdoing in last August’s blackouts by the Electricity Authority. Mercury was up 2.3% at $5.97 on an unusually large volume, Contact Energy rose 1.6% to $8.08 and Meridian Energy declined 0.8% to $4.95.

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