NZ shares rise as covid-19 crater passes

New Zealand shares finished an already strong week with an extra surge as investors anticipated the end of strict lockdowns locally and in the United States. Tourism Holdings and SkyCity Entertainment Group notched up double-digit gains.

Friday, April 17th 2020, 6:55PM

by BusinessDesk

The S&P/NZX 50 Index rose 305.53 points, or 2.9 percent, to 10,778.72. Within the index, 41 stocks increased, six fell and three were unchanged. Turnover was $354.4 million.

The local benchmark is up more than 8 percent from the close before Easter weekend as the number of new virus cases continues to fall.

Greg Smith, head of research at Fat Prophets, said the positive end to an already strong week was a sign of investor optimism.

Share markets across Asia gained after US President Donald Trump indicated he would begin reopening the US economy with a staged exit from lockdown. In New Zealand, investors continued to expect restrictions to ease after just eight new confirmed and probable cases of covid–19 were reported today.

“We’ve had a little bit of clarity around level 3, which it looks like we will move to given single-digit cases today,” Smith said.

That optimism was bolstered by reports that a covid–19 treatment being tested by Gilead had shown promising results. The American biotechnology company’s stock price jumped 16 percent on the news and provided further excitement for investors looking toward the end of the outbreak crisis.

Shane Solly, a portfolio manager at Harbour Asset Management, said that although the report had not been confirmed, it was giving investors a reason to buy.

“There is a lot to be positive about with New Zealand looking to move out of lockdown and perhaps be a country with a relatively low impact from the virus outbreak,” Solly said.

He said as we “passed the crater,” local companies that were caught in the eye of the storm have recovered strongly this week.

Tourism Holdings led the market higher, increasing 13.7 percent to $1.41 on the improving virus outlook. However, Fat Prophets' Smith warned investors may be getting ahead of themselves as the future of tourism remained uncertain.

SkyCity rose 10.5 percent to $2.53. Smith said moving to level 3 didn’t mean consumers would be flocking back to the casino, although he noted the stock had been heavily sold throughout the downturn.

Vista Group International advanced 6.4 percent to $1.49, well above the $1.05 price investors are paying in its $65 million capital raising. Harbour's Solly said the cinema software company had found strong support after raising money and was now in a strong position.

“Movie visitation is very constrained so any news that may ease that constraint will provide a rally,” he said.

Among other companies to have recently raised capital, Kathmandu Holdings increased 5.3 percent to 79 cents and Auckland International Airport rose 2.7 percent to $6.11.

Local courier company Freightways rose 3.4 percent to $6.93, while global logistics group Mainfreight posted the day’s biggest loss, falling 1.5 percent to $37.43.

Air New Zealand fell 0.4 percent to $1.31 as its rally eased after seeing strong gains across the week.

Vector was unchanged at $3.45. Today it joined other major lines companies in a plan to defer lines charges for business customers to help tide them through the downturn.

Power companies were stronger after the Electricity Authority released a new cost-benefit analysis for proposed changes to transmission pricing. Contact Energy rose 5.5 percent to $6.53, Genesis Energy increased 3.2 percent to $2.95, Mercury NZ advanced 2.3 percent to $4.40, Meridian Energy rose 0.5 percent to $4.37, and Trustpower edged up 0.2 percent to $6.55.

The future of the Tiwai Point aluminium smelter - the country's biggest electricity user - remains an uncertainty hanging over the power companies. Today Rio Tinto said its strategic review of the smelter was continuing.

Of the dairy stocks, Fonterra Shareholders' Fund units fell 1.3 percent to $3.80, A2 Milk Company rose 1.6 percent to $19.81 and Synlait Milk advanced 2 percent to $7.54.

Outside the benchmark index, PGG Wrightson jumped 12.9 percent to $2.54. Rural Equities today sold its stake in the firm at $2.75 a share.

Tags: Market Close