by Paul McBeth
New Zealand’s S&P/NZX 50 index declined in a shortened trading week with Vista Group International, Serko, KMD Brands and Vulcan Steel at the bottom of the leaderboard as tensions in the Middle East and elevated oil prices continue to keep investors on edge, while local data painted a mixed picture of the domestic economy.
Green Cross Health enjoyed its best week since August 2009 after agreeing to sell its GP business The Doctors to Tend Health, while Heartland Group Holdings posted its biggest weekly gain since August last year after announcing its deal to merge its bank with TSB.
The local market closed the week on a positive note as the NZX50 gained on Friday, with Ebos Group joining a recovery among Australian healthcare companies while Spark New Zealand came off its 15-year low and heavyweights Fisher & Paykel Healthcare and Auckland International Airport provided a broader tailwind.
Sanford dropped back to Ngāi Tahu’s offer price when it resumed trading from the iwi investment arm’s selldown.
A slow recovery
The NZX50 rose 60.36 points, or 0.5%, to 13,161.97 on Friday, with 17 stocks gaining, 26 declining and seven unchanged.
That pared the weekly decline to 0.6% as optimism waned about how quickly the US and Iran would reach a lasting peace, pushing oil prices higher and sapping investors’ appetite for riskier assets. The kiwi dollar traded at 58.68 US cents at 5pm in Auckland from 58.73 cents yesterday and was on track for a 2% decline this week.
Among the sharpest decliners on the week, software firms Vista and Serko dropped 14% and 11% respectively, while retailer KMD declined 11% and building products firm Vulcan shed 10%, trading near a 12-month low on an adjusted basis.
Meanwhile, Heartland ended the week up 7.9%, paring a steep rally, after agreeing to buy TSB for $620 million in a scrip and vendor-financed deal, while Green Cross soared 37% on the $270 million sale of its The Doctors medical division.
Still, the local market outperformed much of Asia in the Friday trading session, with Australia’s S&P/ASX 200 down 0.7% in late trading, Japan’s Nikkei 225 falling 1.4% and Hong Kong’s Hang Seng slipping 0.8%.
The S&P/NZX 50 index futures contract for June was unchanged at 7,438 on Friday, with 300 lots traded for a value of $2.2 million. The NZX20 rose 0.6% to 7,477.5.
Turnover across the main board was $197.1 million, with Sanford accounting for $63.4 million as the fishing company returned from a trading halt to let Ngāi Tahu sell almost half its stake at a discount. Sanford fell 2.8% to $7.21, holding above the $7.15 price in the block trade.
Ebos led the NZX50 higher, rising 3.1% to $20.11 and joining a rally among Australian healthcare stocks such as CSL and ResMed.
“Australian markets have been having a rotation in their sectors, charging into one and then moving into another,” said Matt Goodson, managing director at Salt Funds Management. “Healthcare has been a horrendous underperformer for a while and it’s doing quite well today.”
F&P Healthcare gained 0.9% to $37.18, while other heavyweights helped buoy the NZX50, with Auckland Airport up 0.9% at $8.33 and Infratil advancing 1.5% to $15.42.
Coming down to earth
Spark recovered from its 15-year low, rising 1.6% to $1.87, while Chorus fell 0.8% to $9.46.
Salt’s Goodson said recent broker reports on the impact of low-earth orbit satellites on carriers had been weighing on telcos globally, which added to investors’ already-sour view on Spark.
Meridian Energy was unchanged at $5.91 after the country’s biggest electricity generator said it received draft approval for easier access to contingent storage at its Lake Pūkaki hydro storage for three years. The extra drawdown would create the equivalent electricity to 176 megawatts and was estimated to reduce wholesale prices by 7%.
Goodson said he was surprised by the lack of reaction to the news.
“That could be quite a significant step in dealing with some of the dry-year risk and potentially could lower long-term electricity prices,” he said.
Contact Energy rose 0.3% to $9.60 and Mercury NZ gained 0.3% to $7.06, while Genesis Energy climbed 1.2% to $2.64.
Tourism Holdings posted the steepest fall on the day, down 3.1% at $2.47, while KMD dropped 2.6% to 7.4 cents, Serko declined 2.6% to $1.52, Vulcan decreased 2.3% to $5.95 and Vista slid 2.2% to $2.22.
Stride Property fell 1.8%, or 2 cents, to $1.09 after shedding rights to an upcoming 2 cents per share dividend, while Green Cross declined 1.9%, or 4 cents, ahead of its upcoming dividend of 5.5 cents per share. Third Age Health was unchanged at $4.76, even as it shed rights to a 4 cent dividend.
After trading closed, the quarterly S&P Dow Jones Indices rebalancing kept the NZX20 and NZX50 unchanged, while Rua Gold and Taiko Critical Minerals were added to the All and Small cap indices from June 22, and Port of Tauranga replaced Ryman Healthcare in the Morrison infrastructure index.
Paul is a staff writer for Good Returns based in Wellington.
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