NZ shares hit record as prospect of US-China trade deal buoys Asia; A2 gains

New Zealand shares rose to a record high as the prospect of a trade deal between the US and China helped buoy stock markets across Asia. Dairy exporters A2 Milk and Synlait Milk were among the day's leaders.

Monday, March 4th 2019, 8:54PM

by BusinessDesk

The S&P/NZX 50 Index increased 61.81 points, or 0.7 percent, to 9,413.49, touching a record 9,420.14 during the session. Within the index, 34 stocks rose, 13 fell, and three were unchanged. Turnover was $135 million.

Stocks across Asia were stronger as speculation that the US and China were close to a deal buoyed optimism among investors. Australia's S&P/ASX 200 index was up 0.5 percent in late trading, while Hong Kong's Hang Seng gained 1.2 percent and Singapore's Straits Times Index rose 0.7 percent.

"People are going to be focused on the international drivers and the big focus is on the trade result," said Greg Smith, head of research at Fat Prophets. "The big fear for investors is if that fails, because China is our biggest customer."

A2 Milk led the benchmark index, up 3.2 percent at $14.75, on an average volume of 919,000. The milk marketing firm was among the stand-out performers in the latest company earnings season, underpinned by its ability to keep boosting sales of infant formula into China. Supplier Synlait Milk rose 1.8 percent to $10.59, with 404,000 shares changing hands, about four times its 90-day average.

Fisher & Paykel Healthcare reported the biggest decline on the day, down 2.5 percent at $14.69 on a volume of 1.2 million, compared to its 90-day average of 714,000. New Zealand's currency has been supported by the increased optimism over a potential US-China trade deal, and got a boost from US President Donald Trump complaining about the greenback's recent strength. F&P Healthcare derives more than half its revenue in US dollars and benefits from a weaker kiwi.

Smith said if the currency's strength continues it will keep undermining exporters.

Fonterra Shareholders' Fund units rose 1.7 percent to $4.25. The country's dominant milk processor reached a deal with stainless steel fabricator Mercer over a collapsed silo in 2016. Mercer shares rose 9.1 percent to 24 cents on a light volume of 34,000 shares.

Spark New Zealand was the most traded stock, with a volume of 4.1 million, compared to its 4.6 million 90-day average. The shares were unchanged at $3.745. Trade Me, which turned 20 today and is facing a takeover by British private equity firm Apax Partners, was unchanged at $6.40 on a volume of 2.2 million.

Of other companies trading on volumes of more than 1 million, Meridian Energy rose 1.9 percent to $3.81, Auckland International Airport fell 0.7 percent to $7.53, Fletcher Building increased 0.8 percent to $5.03, Air New Zealand gained 1.8 percent to $2.52, and Precinct Properties New Zealand was up 1 percent at $1.52.

Smith said stocks offering investors stable dividends remained in favour, with property investors, power companies and other utilities still in demand.

Chorus rose 2.1 percent to $5.42 and Mercury NZ gained 2.2 percent to $3.80, both on slightly lighter volumes than usual.

Outside the benchmark index, Wellington Drive Technologies fell 10 percent, or 2.5 cents, to 24 cents after reporting positive earnings and revenue growth of 36 percent after trading ended on Friday. The result met its guidance, and the stock is up 54 percent over the past 12 months.

Tags: Market Close