Gentailers dominate trade; Mercury wind farm has investors revisiting smelter fears

New Zealand shares edged higher as Mercury NZ's decision to press ahead with the second stage of what will be the country's biggest wind farm had some investors revisiting their fears of the energy-hungry Tiwai Point smelter closing.

Tuesday, November 12th 2019, 7:53PM

by BusinessDesk

The S&P/NZX 50 Index increased 6.52 points, or 0.1 percent, to 10,926.31. Within the index, 23 stocks rose, 19 fell and eight were unchanged. Turnover was $140.4 million.

Mercury, which will join the MSCI New Zealand Index later this month, today announced it will go ahead with a $208 million southern element of a planned wind farm at Turitea. Chief executive Fraser Whineray said the smelter's closure by 2030 was always considered likely and didn't change Mercury's view on investment risk. The shares rose 0.8 percent to $4.98 on a volume of 1.7 million shares, more than its 90-day average of 998,000.

Meridian Energy, the smelter's primary supplier, increased 1.7 percent to $4.72 with 2.8 million shares changing hands, more than its 1.6 million average. The response wasn't universal, given the new wind farms will also compete with the other generator-retailers. Contact Energy fell 1.2 percent to $7.15 on a volume of 1.2 million and Genesis Energy dropped 1.5 percent to $3.25.

Peter McIntyre, an investment adviser at Craigs Investment Partners, said the decision had surprised some investors given the uncertainty around the Tiwai Point smelter's future.

"The Tiwai prospect of leaving New Zealand is priced in, to a certain extent, to some of those gen-tailers now, and maybe Mercury had moved too far down the planning process to back out," he said.

Kathmandu Holdings led the market higher, up 3.1 percent at $3.02 on a volume of 180,000, down on its 314,000 average.

Heartland Group rose 1.2 percent to $1.67 after forecasting another increase in annual profit at today's annual meeting.

Vital Healthcare Property Trust increased 1.2 percent to $2.61 after reporting a first-quarter loss of $1.4 million, due primarily to unrealised losses on derivatives.

McIntyre said tomorrow's Reserve Bank policy review was hanging over the market, with investors tending to predict the committee will cut the official cash rate a quarter-point to 0.75 percent. Property companies have been under pressure in recent weeks as global swap rates have increased, reducing the attraction of the dividend yield of the stocks.

Stride Property fell 1.8 percent to $2.24 today, Investore Property was down 1.1 percent at $1.87 and Precinct Properties New Zealand declined 0.6 percent to $1.79 with 1.2 million shares traded.

Auckland International Airport fell 2.1 percent to $9.10 on a volume of 1.2 million shares after government data showed short-term visitor arrivals entering New Zealand through the country's main gateway was flat, whereas other airports registered increases.

Air New Zealand decreased 0.5 percent to $2.87 after it announced several hundred new regional routes to replace rival Jetstar's pared-back New Zealand operation.

Westpac Banking Corp posted the day's biggest decline, down 3.7 percent, or $1.12, at $28.88. The dual-listed bank shed rights to an 80 Australian cent dividend today.

Fonterra Shareholders' Fund units declined 2.4 percent to $4.05.

Spark New Zealand was the most traded stock on a volume of 2.9 million shares. It increased by 0.1 percent to $4.44. Of other stocks trading on volumes of more than a million shares, Fletcher Building increased 0.2 percent to $5.16, Oceania Healthcare gained 2.9 percent to $1.07 and Fisher & Paykel Healthcare was up 0.2 percent at $20.90.

Tags: Market Close