Optimism over US-China trade deal welcomed by the market; Cracks at Metroglass

New Zealand shares were buoyed by upbeat sentiment across Asia as investors clung to hopes that a China-US trade deal could be reached before the end of the year.

Monday, November 25th 2019, 5:50PM

by BusinessDesk

The S&P/NZX 50 Index increased 7.37 points, or 0.1 percent, to 10,953.67. Within the index, 14 stocks rose, 33 fell, and three were unchanged. Turnover was $135.5 million.

Stocks across Asia rallied on comments by US national security adviser Robert O’Brien that an initial trade deal could be done by the end of the year. CNBC also reported that China was considering tougher penalties for intellectual property theft - a key US demand - as part of a compromise to keep the talks on track.

Hong Kong’s Hang Seng was up 1.8 percent in afternoon trading, following local body elections that delivered a landslide to pro-democracy campaigners. Australia’s S&P/ASX 200 Index was up 0.4 percent, and South Korea’s Kospi 200 Index rose 1.1 percent.

Growth stocks were among the strongest performers across the region, including ASX-listed Xero, which hit an all-time high A$79.99. On the NZX, Pushpay Holdings rose 0.9 percent to $3.50 on a volume of 1.4 million shares, more than its 90-day average of 455,000.

Fisher & Paykel Healthcare increased 2 percent to $20.87. The breathing mask manufacturing is due to report first-half earnings on Wednesday.

“Growth names, in particular, have performed well, with some of the tech stocks, such as Pushpay having a high-volume day,” said Brad Gordon, an investment adviser at Hobson Wealth Partners.

“Fisher & Paykel Healthcare continues to be extremely strong.”

Mercury NZ led the market higher, up 3.7 percent at $4.83 on a volume of 6.2 million shares, well up on its 1.7 million average.

Retirement village operators were also stronger, with Ryman Healthcare up 2.4 percent at $14.44, and Summerset Group rising 1.5 percent to $7.38. Arvida Group increased 0.6 percent to $1.60 and Oceania Healthcare advanced 0.9 percent to $1.10. Metlifecare was unchanged at $5.80.

Gordon said investors would probably expect to hear more news about a potential Metlifecare takeover offer, after the board received a sub-par bid from a credible buyer last week.

Metro Performance Glass dropped 11.3 percent to 31.5 cents after it reported a 15 percent decline in first-half profit and signalled annual earnings would be even weaker than previously forecast.

Gordon said that weak result, and a similarly soft outlook from Steel & Tube Holdings, didn’t bode well for Fletcher Building ahead of a trading update at its annual meeting this week.

Fletcher Building declined 1.1 percent to $5.22 on a volume of 1.1 million shares. Steel & Tube fell 2.4 percent to 82 cents.

Gentrack posted the day’s biggest fall on the benchmark index, down 8.9 percent at $4.10, extending its decline from last week when it said it missed its earnings guidance. The utilities software developer dropped 12.6 percent on Friday. Volumes today were typically light at 51,000 shares, compared to its 104,000 average.

Stride Property slipped 0.5 percent to $2.19. The property investor and manager reported a 7 percent decline in first-half profit due to a bigger tax bill and as it bore the cost of setting up a new special-purpose industrial property fund. Investore Property, which is managed by Stride, was down 1.1 percent at $1.77.

Air New Zealand rose 1.1 percent to $2.83. The airline restarted its Auckland-Seoul route over the weekend after a 20-year spell. Just days after the first flight, Korean Air announced a trial charter service flying into Christchurch. Auckland International Airport increased 0.2 percent to $9.20.

Fonterra Shareholders’ Fund units decreased 0.3 percent to $3.99. China Mengniu Dairy has agreed to buy Kirin-owned Lion Dairy & Drinks for A$600 million, expanding its footprint in Australia where it’s lobbed in a A$1.5 billion bid for infant formula maker Bellamy’s Australia. A2 Milk was down 0.7 percent at $14.84 and Synlait Milk dipped 0.9 percent to $9.06.

Chorus declined 1.2 percent to $5.535. Research house Morningstar lifted its fair value estimate by 30 percent to $5.60 on a more favourable view of the network operator’s regulatory settings after the Commerce Commission’s draft decision on fibre input methodologies last week.

Spark New Zealand, the biggest buyer of wholesale telecommunications access, fell 0.8 percent to $4.44 on a volume of 2.2 million shares, less than its 3 million average.

Of other stocks trading on volumes of more than a million shares, Meridian Energy increased 0.2 percent to $4.325, Kiwi Property Group fell 0.6 percent to $1.55 and Contact Energy decreased 0.2 percent to $6.84.

Westpac Banking Group fell 1.9 percent to $25.81. The dual-listed bank today announced its response to AUSTRAC’s claim that it failed in meeting laws to prevent money laundering.

Abano Healthcare increased 0.2 percent to $5.40. The company told shareholders at today’s annual meeting that earnings in the first five months of the financial year were up from a year earlier, even as Australian sales fell. The company is under a takeover offer at $5.70 a share.

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