Sharemarket cracks 10,000 mark

The S&P/NZX 50 Index closed above 10,000 for the first time in almost a month as dwindling numbers of new covid-19 cases helped buoy some of the most exposed sectors of tourism, retail and aged care.

Wednesday, April 8th 2020, 6:47PM

by BusinessDesk

The benchmark index increased 2.3 percent to 10,031.66, the highest close since March 12. Within the index, 29 stocks rose, 16 fell, and five were unchanged. Turnover was $314 million.

Investors welcomed signs of the pandemic's spread slowing down, with China's Wuhan ending a two-month lockdown, and Austria announcing plans to reopen the country on April 14 after it was able to get on top of the virus faster than other nations.

The number of new cases of covid-19 in New Zealand rose to 1,210, with 50 new cases reported today. That's a drop from both the 54 new cases yesterday and the 67 reported on Monday. US newspaper, the Washington Post ran a story praising New Zealand’s own quick response to the crisis saying the country was not just flattening the curve but “squashing it”.

Stuart Williams, head of equities at Nikko Asset Management, said investors welcomed this type of positive news to weigh against negative economic forecasts and potential job losses.

SkyCity Entertainment Group led the market higher, up 8.8 percent at $1.97. The casino and hotel operator has been among the hardest by the pandemic as a global shutdown in tourism all-but shut down its businesses.

Retirement village operator Summerset Group increased 6.3 percent to $5.95, Restaurant Brands New Zealand advanced 4.6 percent to $10.30, and Tourism Holdings rose 4.8 percent to $1.10.

Auckland International Airport increased 1.2 percent to $5.45, while Air New Zealand fell 1.8 percent to 83.5 cents.

Infratil shares rose 7.2 percent to $4.30. The infrastructure investment company today said it estimated operating earnings for the year ended March 31 at between $550 million and $560 million, down from the $575 million to $615 million previously forecast due to accounting treatment of partial asset sales. And it warned it might pay a smaller dividend than the 11 cents per share previously signalled.

Retirement village operator Metlifecare slumped 17.4 percent to $3.51, posting the steepest fall of the day. The company said it was told last night that European buy-out firm EQT was backing out of the $1.49 billion takeover.

Williams said the investors bailing out of the stock today were arbitrage buyers who had been looking to make quick money, rather than long-term investors.

“It is currently very, very cheap for an exceptionally good business,” he said.

Mainfreight increased 4.1 percent to $34.20 after it gave a market update reporting a 7 percent year-on-year decline in revenues.

Williams said while revenue had fallen, the announcement was “less bad than feared” amounting to a positive announcement considering current global headwinds.

Australian banking stocks were also weaker after their credit ratings were downgraded by Fitch Ratings. The ratings agency said it expected the economies of both Australia and New Zealand to shrink as a result of the coronavirus crisis and consequent lockdowns.

Westpac Banking Corp fell 1.8 percent to $16.10 and Australia & New Zealand Banking Group slipped 1.2 percent to $16.50.

Kathmandu Holdings, which has large retail exposure in Australia, fell 10.1 percent to 62 cents.

Outside the benchmark index, Rakon shares rose 5.8 percent to 20 cents after the company said it would meet guidance of annual underlying earnings, despite the uncertainty caused by the covid-19 pandemic.

Tilt Renewables rose 3.8 percent to $3.01 after the company said it will return A$260 million to shareholders via a share buyback, using the proceeds from its sale of Snowtown 2 wind farm last year. The renewable energy developer said it will still have a strong balance sheet after the capital return.

Tags: Market Close