NZX 50 hits new low for 2023
The New Zealand sharemarket closed at its lowest level this year – dragged down by unusual volatility in the largest local stock, Meridian Energy.
Tuesday, September 5th 2023, 6:23PM
by BusinessDesk
The S&P/NZX 50 Index began sliding at midday and finished at 11,437.25, declining 75.78 points or 0.66%. The index has now fallen into negative territory for the year, down 0.3%, and its previous lowest close was 11,404.83 points on December 20.
There were 49 gainers and 72 decliners over the whole market on volumes of 32.06 million share transactions worth $133.28m.
Meridian was down 16c or 2.91% to $5.34 – making up nearly a quarter of the overall fall on the index. The day before, Meridian was up 4.46% to $5.50.
Fellow energy stocks Genesis declined 6c or 2.41% to $2.425, and Mercury was down 4c to $6.16.
Jeremy Sullivan, investment advisor with Hamilton Hindin Greene, said Meridian makes up a decent chunk of the index, and it certainly has been volatile over the past two days. “Meridian and Contact are in clean energy indices, and passive investment funds can move stocks around.”
With the United States markets closed overnight for Labour Day, there were few offshore leads. But oil prices have increased nearly 20% in the last six weeks – with crude oil presently trading at US$85.43 (NZ$144.87) a barrel.
The ANZ World Commodity Price Index fell for the third consecutive month, dropping 2.9% in August and led by an 8.7% fall in dairy prices. Aluminium prices were 12% lower over the past year.
Global shipping prices continued to ease, horticulture lifted with strong returns from kiwifruit, and meat and fibre were stable in August, with stronger beef returns offsetting lower returns for lamb and wool. Prices of wool were at their lowest level in 10 months.
ANZ Research said the Pre-election Economic and Fiscal Update, to be released on Sept 12, is expected to show a weaker activity outlook overall because of the deterioration in export prices and weaker-than-expected starting point for gross domestic product.
ANZ said Treasury will likely upgrade its house price forecast, which could bring some meaningful offsets via residential investment and private consumption.
“A slightly rosier economic outlook than our own would not surprise on the day.”
Auckland International Airport was up 5c to $8.10 on trade worth $41.75m. UBS Group AG disclosed that it has a 5.7% shareholding in the airport. Sullivan said UBS were the underwriter of the Auckland council airport shares sale and was warehousing the (remaining) stock until it was on-sold.
SkyCity Entertainment steadied at $2.02 after reaching an intraday high of $2.15. SkyCity fell 13.3% the day before when the company disclosed it was facing a possible suspension of its casino licence in NZ from the Gambling Commission.
Westpac declined 42c or 1.77% to $23.37 after acknowledging Federal Court civil penalty proceedings by the Australian Securities and Investments Commission (ASIC) alleging contraventions under the National Credit Code and National Consumer Protection Act.
ASIC says because of a technology failure, 229 applications for hardship assistance submitted between 2015 and 2022 were not assessed within 21 days, as required under the Credit Code. Westpac has since contacted the customers and completed a remediation programme worth $900,000.
Red ink
Fletcher Building was down 8c to $4.81; Ebos Group declined 87c or 2.31% to $36.79; Mainfreight shed 46c to $65.88; Hallenstein Glasson decreased 16c or 2.62% to $5.94; and Freightways gave up 13c to $8.47. Summerset Group went ex-dividend and was down 15.7c to $9.95.
Sanford declined 12c or 2.99% to $3.89; Smartpay Holdings declined 6.5c or 4.02% to $1.55; Winton Land was down 5c or 2.13% to $2.30; Move Logistics shed 3c or 4.17% to 69c; and Solution Dynamics fell 9c or 5.03% to $1.70.
Sky TV was down 6c or 2.52% to $2.32; Vista Group fell 10c or 6.17% to $1.52; Scales Corp declined 7c or 2.26% to $3.03; Channel Infrastructure decreased 2.8c or 1.8% to $1.l52; and AoFrio was down 0.l008c or 10.26% to 7c.
Eroad increased 9c or 6.92% to $1.39; Briscoe Group gained 9c or 1.94% to $4.74; Serko added 6c to $3.91; NZ Oil & Gas was up 1.5c or 4.05% to 38.5c; and Comvita collected 5c to $3.20.
Property companies Investore was up 3c or 2.38% to $1.29, and Argosy gained 2.5c or 2.17% to $1.175.
Rua Bioscience, unchanged at 10.9c, told the market its product is now available to Australian patients on prescription and is being distributed by Anspec.
Fellow medicinal cannabis company Cannasouth increased by 3.5c or 18.92% to 22c. The Cannasouth board “commissioned an issuer-sponsored research report” from Sydney-based Pitt Street Research. Pitt Street valued Cannasouth at 34c (base case projection) and 43c (optimistic case).
Sullivan said Cannasouth had a negative cashflow, and it’s a bit hard to value the company based on a discounted cashflow model.
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