Investors move to defensive stocks on global jitters

New Zealand shares rose slightly as growing investor unease over the global economy bolstered demand for defensive stocks such as local utilities Meridian Energy and Mercury NZ.

Friday, January 4th 2019, 10:37PM

by BusinessDesk

The S&P/NZX 50 index increased 11.39 points, or 0.1 percent, to 8,743.76. Despite the increase, within the index, 19 stocks gained against 23 that fell, and eight were unchanged. Turnover was low at $73.4 million.

Stocks across Asia were mixed, following a decline on Wall Street after Apple's downgraded sales outlook over China's slowing economy. Financial markets have been increasingly volatile in recent months as investors remain nervous about a number of political risks ranging from the US-China trade dispute, to Brexit, to the US federal government shutdown.

The trade dispute is seen as a major immediate threat to economic growth and investors are keen to see a resolution to avoid a slowdown hitting company earnings. Chinese and American officials are scheduled to meet next week for more negotiations.

The local market was down for much of the day, before entering positive territory late in the trading day.

"It's a reflection of the New Zealand market being reasonably defensive," said Grant Davis, an investment adviser at Hamilton Hindin Greene. "It's not going to shoot up as much and it's not going to drop as much."

Electricity generator-retailer Meridian led the market higher, up 2.3 percent at a record $3.50 on average volumes, while Mercury rose 1.7 percent to $3.57 in light trading. Exporter Fisher & Paykel Healthcare, which is more dependent on the US market, increased 1.9 percent to $13.19, on just below average volumes.

Spark New Zealand was the most traded stock with 2.4 million shares changing hands, below its 3.1 million 90-day average volume. The stock increased 0.2 percent to $4.15. Trade Me Group fell 0.5 percent to $6.29 on a volume of 1.7 million, while A2 Milk dropped 2.3 percent to $10.75 on a volume of 1.4 million.

Metlifecare declined 3.4 percent to $5.10 in very light trading, while Pushpay Holdings dropped 3.3 percent to $2.95 and Gentrack Group was down 3.2 percent at $4.78. Both tech stocks were thinly traded.

Kathmandu Holdings extended its decline after reporting weak sales through the Christmas period. The stock fell 2.1 percent to $2.32, its lowest close since March last year.

Other retailers are expected to start providing Christmas trading updates in the coming weeks. Briscoe Group fell 2.4 percent to $3.30, Hallenstein Glasson was down 2.2 percent at $4.07, Smiths City Group was unchanged at 27.5 cents, and Warehouse Group decreased 0.5 percent to $2.04.

SLI Systems was unchanged at 64 cents. The company will delist from the NZX next week after Texan firm ESW successfully took over the local software developer with a 65 cents per share offer. NZX increased 1 percent to 99 cents.

Tags: Market Close