New Zealand shares fall as investors go on “buyers strike”

New Zealand shares fell as investors were unnerved by news that the coronavirus fatality rate passed that of the SARS outbreak almost two decades ago.

Monday, February 10th 2020, 6:21PM

by BusinessDesk

The S&P/NZX 50 Index dropped 58.29 points, or 0.5 percent, to 11,702.59. Within the index, 28 stocks fell, 16 rose and six were unchanged. Turnover was $132.9 million.

China's government today eased some restrictions imposed due to the coronavirus outbreak, although a number of workplaces remained closed and some white collar workers worked from home. ANZ Bank New Zealand economist Liz Kendall said investors would keep a close watch on the reopening of Chinese factories and ports.

“Whether that is achievable, and to what extent, will provide direction about the extent of ongoing disruption as the outbreak continues,” she said.

New Zealand exports have already been hit by the disruption to China's economy, and is local economic growth is expected to face a short-term blip.

“If the virus is contained quickly, then a vigorous bounce back in activity is expected. But a larger impact cannot be ruled out,” Kendall said.

Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene, said negative cues from international markets were fuelled by fears of the coronavirus outbreak causing a global slowdown, and that weighed on the local market market.

“It is a bit of a buyer's strike. We not seeing huge volumes go through, so it is not like there is panic selling or anything,” he said.

In early trading, Australia's S&P/ASX 200 Index was down 0.1 percent, Singapore’s Hang Seng was down 0.8 percent and Shanghai’s SSEC was down 0.4 percent.

On the NZX 50, Tourism Holdings led the market lower, down 3.3 percent to $2.90. The stock received some relief last week after a profit warning wasn't as bad as some investors feared. However, with tourism stocks remain under pressure with New Zealand still closed to Chinese visitors.

Other tourism-related stocks also fell. SkyCity Entertainment Group, which reports first half earnings on Wednesday, was down 1.4 percent at $3.57, Air New Zealand held steady at $2.80 and Auckland International Airport fell 1.1 percent to $8.65 on a volume of 949,000 shares.

On Friday, the International Federation of Airline Pilots Associations issued an urgent safety warning to airline pilots claiming the number of unplanned runway closures has been increasing at Auckland and advised pilots to consider contingency plans when flying to Auckland.

Contact Energy said today that first-half operating earnings fell 21 percent amid tight gas supplies and reduced sales volumes to the firm’s commercial and industrial customers. Its shares fell 0.1 percent to $7.22 on a volume of 890,000.

Other utility stocks were also weaker, Genesis Energy fell 2.3 percent to $3.16, Meridian Energy fell 1.3 percent to $5.45 on a volume of 1.5 million shares and Mercury NZ fell 0.9 percent to $5.25.

The coronavirus outbreak had also weighed on port operators as delays led to some contractors closing their operations.

Sullivan said forestry crews downing tools, due to coronavirus related delays, would be weighing on Port of Tauranga which exports a high quantity of logs.

Port of Tauranga fell 2.5 percent to $7.31 and Napier Port fell 4.14 percent to $3.47.

Among other transport stocks, Mainfreight fell 1.6 percent to $40.25 and Freightways rose 1.5 percent to $8.56.

Gentrack Group posted the day's biggest gain and its fifth consecutive increase, rising 5 percent to $2.30. The utility software developer has been under pressure since it slashed its earnings forecast in January following the loss of a large customer in the UK.

Sullivan said having Brexit done has brought some certainty to investors who are beginning to return to the stock.

“It does look like the worst may be over for them. They have bounced north of 10 percent since that $2 dollar level at the end of January, so investors are starting to see value there.”

Tags: Market Close