New Zealand shares joins Asia rally; Air NZ plummets

New Zealand shares joined a rally across Asia, clawing back some of the week’s losses, despite Air New Zealand tumbling by a third after coming off a trading halt.

Friday, March 20th 2020, 6:02PM

by BusinessDesk

The S&P/NZX50 rose 87.91 points, or 1 percent, to 9,114.53. Within the index, 27 stocks rose, 20 fell and 3 were unchanged. Turnover was almost double the average at $482.7 million with an extended adjustment session to accommodate the last trading day before the FTSE Russell's quarterly index review.

Chris Smith, general manager at CMC Markets New Zealand, said US equity markets reversed overnight with the S&P 500 closing up 0.5 percent and the Dow Jones increasing 1 percent.

That spilled into Asia, where Hong Kong’s Hang Seng was up 3 percent, Shanghai’s SSEC rose 0.5 percent and Australia’s S&P/ASX200 climbed 1.8 percent.

The local benchmark is off almost 3 percent across the week and down 20.5 percent in the year-to-date.

Air New Zealand was the big news at the tail end of a “wild week” with firm selling pressure and extreme volatility, Smith said.

Finance Minister Grant Robertson today said the government’s $900 million loan would keep the airline afloat, but at the cost of any future dividend payments while any debt is outstanding. The debt can also be converted to equity.

Smith said the national carrier was already off 30 percent before entering the trading halt and the news it would be hampered with more debt and cancelling its future dividends caused more investors to jump ship.

“New Zealand investors rely on income and look for companies that pay reliable, solid dividends. At the moment, we are seeing leading New Zealand companies cutting their dividends.”

Air New Zealand dropped 35.7 percent to 99 cents with 15.3 million shares changing hands as investors judged the bailout to be too small. The airline started the year at $2.93 and its 90-day trading average is just 1.2 million shares.

Rickey Ward, New Zealand equity manager at JBWere, said the size of the loan was too small given there was speculation that $2 billion-to-$3 billion was needed.

Synlait Milk led the market higher rising 15.9 percent to $5.10 after reporting its first-half result yesterday. Profit fell more than expected, but the milk producer held its full-year guidance for the full-year and said there had been no operational impact from the virus outbreak.

A2 Milk rose 6.5 percent to $16.50, while Fonterra Shareholders’ Fund units slipped 0.8 percent to $3.91.

Smith said some stocks had seen a bounce as investors were buoyed somewhat by stimulus packages, saw value in hard hit stocks.

Vista Group International rose 7.2 percent to $1.34, bouncing back from a record low yesterday. The cinema software firm announced this afternoon it had cancelled the agreement to acquire a further 14.5 percent of Visa China. The deal may be revisited once the impact pandemic is “fully understood”.

Auckland International Airport bounced 8.9 percent to $5, although is still down 42.9 percent this year. About 8 million shares were traded, more than four times its 90-day-average.

Tourism Holdings today cancelled its first-half dividend, slashed director and executive pay and said it is considering leasing campervans as emergency accommodation. The share price increased 12.1 percent to $1.02.

Kathmandu Holdings fell 11.8 percent to 97 cents, falling below a dollar for the first time. The retailer’s share price has fallen more than 70 percent this year.

New Zealand Refining Company fell 15.1 percent to 73 cents, a two-decade low. The fuel manufacturer today said it was focused on reducing its cash spend “immediately and significantly” as crude oil supply surges while demand falls.

Sky Network Television fell 3.6 percent to 26.5 cents and Spark New Zealand declined 2.7 percent to $3.81 with 9.4 million shares trading hands.

Fisher & Paykel Healthcare fell 3.1 percent to 26.61 as investors backed off some of yesterday’s rise.

Smith said the respirator manufacturer had been “one of the bright spots this week”.

Outside the benchmark index, Steel & Tube Holdings fell 7.1 percent to 52 cents after cancelling its interim dividend citing the uncertainty of the virus outbreak, despite trading in line with expectations.

Michael Hill International rose 32 percent, or 8 cents, to 33 cents. The company today announced it will close its Canada store network for a period of two weeks in line with public health guidance. The jeweller also noted a significant reduction of sales in all its markets.

Tags: Market Close