NZ shares spring into September on hopes of economic revival

New Zealand shares rose for a second day as it started the new month on renewed optimism that lower interest rates will revive the moribund economy.

Monday, September 2nd 2024, 6:40PM

by BusinessDesk

The S&P/NZX 50 Index advanced 107.84 points, or 0.9%, to 12,555.52. Across the main board, 93 stocks rose, 45 fell, and 41 were unchanged. Turnover was $114.3 million, with eight companies trading on volumes of more than a million shares as reweightings of MSCI indices and KiwiSaver fund flows stoked some activity.

A sharp reversal of business confidence and the Reserve Bank of NZ’s (RBNZ) pathway to lower interest rates stoked optimism that the economy would bounce back from the protracted downturn, which weighed on the latest company earnings season.

“Earnings were a bit weak, but that was no surprise given the state of the economy,” Matt Goodson, managing director at Salt Funds Management, said. “That weakness was priced and expected, and where companies met expectations, they tended to get rewarded – they didn’t even have to beat expectations.”

Ryman Healthcare rose 1% to $4.90 on a volume of 2.5m shares. The retirement village operator said it would offer a new pricing structure for new residents starting in October and change its accounting treatment of deferred management fees to align with residents' longer tenure.

The country’s biggest retirement village operator also said it didn’t intend to start any new developments for at least 18 months and noted the residential property market was still subdued.

Salt’s Goodson said Ryman’s update was largely negative for the company.

“People are looking at interest rate cuts coming into the mix and hoping for a revival in the housing market,” he said.

The upcoming $1.70 per share takeover of Arvida Group provided support for retirement village operators as some investors sold ahead of the deal to buy into similar companies. Arvida was unchanged at $1.66 on a volume of 2.9m shares. Oceania Healthcare rose 1.2% to 82 cents, and Summerset Group gained 1.7% to $11.60.

Courier operator Freightways, often seen as an economic bellwether, rose 1.9% to $9.68 while building materials firm Fletcher Building declined 3.3% to $2.97, the steepest fall on the NZX 50.

Companies with international operations led the benchmark index higher, with the kiwi dollar dipping against the greenback and the Aussie as it traded near 62.30 US cents at 5pm and 92.15 Australian cents.

Fruit exporter Scales Corp climbed 6.5% to $3.62, metal supplier and distributor Vulcan Steel climbed 5.3% to $7.90, travel software developer Serko rose 4.4% to $3.34, and The a2 Milk Co advanced 3.1% to $6.27.

Tourism Holdings gained 3% to $2.09, Ebos Group rose 2.9% to $36, and Fisher & Paykel Healthcare increased 2.5% to $36.50.

Spring also brought respite on wholesale electricity spot prices as the hydro lakes storage levels improved.

Mercury NZ increased 0.8% to $6.30 on a volume of 1.1m, Genesis Energy rose 1.4% to $2.24, and Contact Energy was up 1.6% at $8.46, while Meridian Energy declined 2.2% to $6.20, and Manawa Energy slipped 0.5% to $3.94. Minnow windfarm developer NZ Windfarms edged up 0.7%, or 0.1 of a cent, to 13.9 cents.

Air NZ was the most heavily traded stock on the exchange, with 6.8m shares changing hands. The national carrier rose 1.8% to 55.5 cents. Last month Air NZ signed a codeshare agreement with Virgin Australia, which will market and resell Air NZ’s trans-Tasman services under a VA code. The Australian Financial Review today reported Qatar Airways is close to buying a minority stake in Virgin Australia.

Among other companies trading on heavy volumes, Spark NZ rose 0.1% to $3.595 with 2.3m shares traded; Argosy Property increased 0.8% to $1.20 on a volume of 1.5m; Precinct Properties NZ advanced 0.8% to $1.35 with 1.4m shares traded; and Kiwi Property Group gained 1.6% to 98 cents on a volume of 1.3m.

Media group NZME rose 3.1% to $1. The media group’s OneRoof real estate listings division was the company’s standout performer in the first half of the year.

Across the Tasman, News Corp-controlled REA Group is considering an A$8.5 billion (NZ$9.2b) takeover of UK property platform Rightmove to become a global player.

Tags: Market Close