NZ shares fall as market rally evaporates

New Zealand's headline share index fell on Wednesday as a global equity rally that started the week lost momentum with investors unwilling to bid up stocks ahead of an economic slowdown.

Wednesday, June 29th 2022, 7:11PM

by BusinessDesk

The S&P/NZX 50 Index fell 60 points, or half a percent, to 10,958.81 Turnover was $112 million.

It was weak consumer confidence data that sent US markets back into decline overnight, according to CMC Markets analyst Tina Teng.

A survey showed confidence was at its lowest since 2013, suggesting rising rates and surging inflation had households feeling nervous and possibly spending less as a result.

“This bleak economic backdrop sparked a renewed recession fear-led selloff in the US stocks, with the growth sectors leading the losses,” she said in a note.

In NZ, Tourism Holdings led the benchmark index lower with a 4.7% drop to $2.23 followed by outdoor retailer KMD Holdings which fell 4.4% to $1.10.

Both are down more than 20% this year.

Growth stock Eroad – which has been heavily sold in recent months – suffered another 4% decline today and traded at a new low at $1.44.

Other stocks chalking up 3% losses included specialist lending stock Heartland Group Holdings, stock market operator NZX, and electricity company Genesis Energy.

Casino operator Sky City Entertainment had the index’s biggest gain – up 3.2% at $2.93 – followed by Vector which rose 2.9% to $4.24, cementing its position as the best performing stock this year.

Auckland International Airport rose 0.3% to $7.38 after analysts at Macquarie said they expected the company to beat its profit forecast.

The airport has told investors to expect a net loss between $25m and $50m for the 2022 financial year, but Macquarie said recovering passenger volumes and sustained cost savings could soften the blow.

Macquarie also increased its forecast for 2023, picking a net profit of $65m, as airlines are “responding quickly to pent up consumer demand” and passenger recovery could “significantly exceed the current forecast”.

Jarden cut 15 cents off Vista Group’s target price – down to $2 versus a market price of $1.64 – but retained an overweight recommendation, saying box office revenues had recovered to 70% of pre-covid levels.

The cinema software company is well-positioned to win market share with its new cloud-based product as the industry emerges from hibernation, the analysts said. “Short-term revenue trends are positive, with an improving box office and historical performance in higher inflationary environments”.

Shares in Fisher & Paykel Healthcare dropped 1.1% to $19.88 after Forsyth Barr said its revenue model highlighted ongoing weakness during June. With the healthcare exporter not issuing revenue guidance, Forsyth Barr has built a proxy model to try to estimate how revenue is tracking.

“Trends are improving off February lows and it is early days in the financial year 2023, but the run-rate remains below current market expectations,” the analysts wrote.

Shares in media company NZME were unchanged at $1.26 after the company announced it had reached 100,000 paid digital subscriptions, three years after first putting the Herald behind a paywall.

“When we launched NZ Herald Premium we were entering into completely new territory, asking audiences to pay for digital news content, which certainly didn’t come without risk,” said chief executive Michael Boggs.

Media companies have historically performed poorly during economic slowdowns as they are highly dependent on advertising revenue which can dry up.

My Food Bag also finished the day unchanged at 82 cents, but traded as high as 84 cents after it was announced co-founder and former chief executive Cecilia Robinson had been asked to rejoin the board.

The NZ dollar was trading 62.51 US cents at 3pm in Wellington, down from 62.96 cents yesterday.

Tags: Market Close