Investors eye eventual recovery

New Zealand shares rose as investors revisited some of the hardest hit stocks as they started preparing for other side of the covid-19 crisis.

Wednesday, April 1st 2020, 7:19PM

by BusinessDesk

Mark Lister

The S&P/NZX50 rose 129.33 points, or 1.3 percent, to 9,926.08. Within the index, 26 stocks rose, 17 fell and seven were unchanged. Turnover was $181.3 million.

Mark Lister, head of private wealth research at Craigs Investment Partners, said the slump in the March quarter came as investors braced for the worst in a global recession. While markets will likely remain volatile, Lister said investors are starting to position themselves for a recovery.

“The share market knew three weeks ago that we were heading for recession, that corporate earnings were going to fall off a cliff and that it was going to be a pretty rough period,” he said.

“The share market knew that and moved in advance. Now we’ve had a good bounce and are probably due for a more volatile period.”

Companies leading the market higher were among those that had been sold off aggressively in the previous quarter — during which the index dropped as much as 30 percent.

SkyCity Entertainment Group led the market higher today, rising 9.1 percent to $2.04. That's still down 49 percent so far this year, although it's recovered from a low of $1.14 last month.

Vista Group International increased 7.8 percent to $1.25. Shares in the cinema software company shed 65 percent during the previous quarter as investors grew wary of its exposure to China and as social distancing rules threatened its revenue.

Auckland International Airport rose 5.2 percent to $5.25 and Air New Zealand advanced 3.5 percent to 88 cents.

“These are all companies that have all fallen quite hard, so are responding to a more positive backdrop,” Lister said.

Refining NZ increased 3.9 percent to 81 cents and fuel retailer Z Energy rose 3.8 percent to $3. Oil prices slipped even lower today and are at levels last seen in 2002.

Genesis Energy rose 2.4 percent to $2.575, Contact Energy increased 1.6 percent to $5.85 and Meridian Energy advanced 0.3 percent to $4.05.

Rio Tinto had said it planned to make a decision on the future of the Tiwai Point aluminium smelter in the March quarter, and Lister said investors may be taking the silence as a sign the smelter may remain open.

“We were expecting a decision on Tiwai by now and we haven’t had one. You can read into that what you will,” he said.

The property sector remained under pressure as news about tenants not paying rent made investors wary.

“Some of these landlords are probably finding themselves with a few holes in the rental books and having to give allowances to keep people going,” Lister said.

Kiwi Property Group declined 0.5 percent to 93.5 cents and Precinct Properties New Zealand fell 0.9 percent to $1.69.

Tourism Holdings declined 4.6 percent to $1.04 and Sky Network Television fell 5.4 percent to 26.5 cents, posting the biggest loss of the day.

Kathmandu Holdings today announced a $207 million equity raising at 50 cents per share. The stock remains on a trading halt at $1.12.

Lister said he expects to see more firms come to the market to raise cash.

“There will be a lot of businesses who are in talks with bankers who will be forced to raise some capital to shore up the balance sheet, as well as others who simply want to act pre-emptively to make sure they have their house in order.”

Tags: Market Close