Upbeat ending for sharemarket this week; F&P Healthcare gets strong lead from rivals

New Zealand shares ended the week on an upbeat note after stock markets were knocked around by the global outbreak of coronavirus. A weaker kiwi dollar buoyed exporters such as Fisher & Paykel Healthcare.

Friday, January 31st 2020, 6:39PM

by BusinessDesk

The S&P/NZX 50 Index rose 51.8 points, or 0.4 percent, to 11,717.44. Within the index, 28 stocks rose, 17 fell and five were unchanged. Turnover was $218.1 million.

Shane Solly, a portfolio manager at Harbour Asset Management, said it was a challenging week for markets as uncertainty around coronavirus has caused investors to step back and wait for more information.

“Reporting season kicks in in a week’s time, and that tends to put people on the backfoot. So, there is uncertainty with what’s happening with coronavirus and investors waiting to see what is happening with results.”

China’s increasing importance as an export market – accounting for 28 percent of New Zealand's merchandise exports in 2019, up from 5 percent in 2008 - leaves the local economy more exposed to any disruption in the world's most populous nation.

Headlines have been dominated by the coronavirus outbreak over the past week and a half as investors started assessing the potential impact on the global economy.

Up to 8,000 cases of the virus have been reported in China, US authorities confirmed the first case of human-to-human transmission in the US, Russia closed its land border with China and the Ministry of Health reported a suspected infection in Auckland.

The New Zealand dollar eased further overnight, falling below 65 US cents for the first time since early December, as anxiety about the coronavirus crisis crowded out other data that investors usually focus on. While bad news for some, the weak currency will be a welcome boost to exporters like F&P Healthcare, which derives most of its income overseas.

F&P Healthcare rose 3.1 percent to $23.3 on a volume of 901,000 shares, and got a strong lead from upbeat earnings from Phillips Healthcare and California-based healthcare firm ResMed.

Europe’s largest asset manager, Amumdi said today that the trough for markets could come in advance of the peak of the epidemic, as markets tend to overreact at the beginning of a crisis and then stabilise and rebound, despite the continuation of the negative news flow.

Travel and tourism companies have been the hardest hit by the fears over the outbreak. Some of those stocks recovered today.

Tourism Holdings led the market higher, up 4.6 percent at $2.99 on a volume of 210,000 shares. Air New Zealand rose 2.2 percent to $2.82 on a volume of 1.5 million shares, and Auckland International Airport rose 1.2 percent to $8.65 on a volume of 1.8 million shares.

Solly said the airport has an attractive long-term position and investors may look through a worrying near-term event and see an opportunity to buy into a business that delivers good returns over the medium term.

SkyCity Entertainment Group fell 1.4 percent to $3.64 on a volume of a million shares.

A2 Milk, which has a large exposure to Chinese consumers, fell 2 percent to $15 on a volume of 1.3 million shares.

“A2, pulling back from a very strong run, obviously has a result in a few weeks, so we’ll look forward to getting a bit more detail there. We are seeing that in a few other stocks, that people are taking a bit of money of the table,” Solly said.

Businesses such as Spark New Zealand and Ebos Group were likely absorbing some of that risk as they can perform relatively well if the economy is in a slow phase for an extended period, Solly said.

Spark rose 0.8 percent to $4.66 on a volume of 4.6 million shares, Ebos rose 0.6 percent to $23.85 on a volume of 108,000 shares.

Among other stocks trading above a million shares, Oceania Healthcare held at $1.22, Precinct Properties New Zealand rose 0.3 percent to $1.88, Metlifecare fell 0.2 percent to $6.87, Meridian Energy rose 1.6 percent to $5.34, Fletcher Building fell 1.8 percent to $5.55, Sky Network Television fell 2.8 percent to 69 cents, Mercury NZ rose 1.4 percent to $5.24 and Goodman Property Trust fell 0.2 percent to $2.32.

Solly said investors were looking forward to a busy reporting season which will give another snapshot of where companies are tracking.

“In the meantime, we can expect interest rates to stay reasonably low and supportive for capital markets,” he said.

Tags: Market Close