Level 2 details boost Tourism Holdings, Restaurant Brands

New Zealand shares rose after investor confidence was bolstered by Prime Minister Jacinda Ardern's outline of alert level 2 restrictions. Tourism Holdings, Restaurant Brands, and Kathmandu Holdings were among the day's leaders.

Thursday, May 7th 2020, 6:10PM

by BusinessDesk

The S&P/NZX 50 Index advanced 76.39 points, or 0.7 percent, to 10,649.23. Within the index, 32 stocks rose, 13 fell, and five were unchanged. Turnover was $182.6 million.

Investors were buoyed by Ardern's announcement, which washed away an unenthusiastic lead from Wall Street. A decision on when to move to level 2 will be made on Monday.

“There was a lot of optimism in the Prime Minister’s wording, and I think also some of the activities that are able to proceed in level 2 probably surprised the market a little as well,” said Peter McIntyre, an investment adviser at Craigs Investment Partners.

The level 2 restrictions let people have contact with a wider range of people – family, friends, and workmates – and also with strangers, in settings such as shops, restaurants, bars, events and airports.

The goal remains to minimise contact with strangers, but will allow life to return to “safer normal”.

“The confidence in that announcement today certainly has buoyed the market and we’ve definitely gotten stronger as that confidence has been reflected in our equity market today,” McIntyre said.

Tourism Holdings rose 11 percent to $1.51 on the back of travel restrictions within New Zealand being relaxed. The stock is up 18 percent this week. Holiday and other travel around New Zealand will be permitted when the country moves to alert level 2, potentially throwing tourism a lifeline.

McIntyre said even though allowing domestic travel wasn’t enough to return Tourism Holdings to its former strength, investors were welcoming the news as an indication that recovery in the wider industry would begin.

Kathmandu advanced 3.3 percent to 94 cents, extending its rally after reporting a surge in online sales earlier this week. Retailing will be permitted to restart provided social distancing measures similar to those in supermarkets can be implemented.

Restaurant Brands is another stock set to benefit from easing restrictions, with level-2 allowing them to reopen dine-in options. It rose 5.7 percent to $12.84.

PushPay Holdings led the market higher, rising 12.9 percent to $6.21 as investors continued to rally around the stock following its bold forward guidance.

“Even though the result wasn’t as good as what some parts of the market would have expected, its outlook was,” McIntyre said.

Air travel stocks failed to join the rally, despite the prospect of domestic flights resuming in earnest.

Auckland International Airport posted the day's biggest decline, down 2.2 percent at $5.70. McIntyre said retail investors who had taken part in the share purchase plan at $4.66 may now be taking advantage of the recent gain and cashing in.

Air New Zealand declined 1.6 percent to $1.235. McIntyre said airlines remained under enormous pressure and investors had already priced in the domestic recovery.

“Air New Zealand has held up remarkably well for a business that has lost 95 percent of its capacity,” he said.

Refining NZ fell 2.2 percent to 88 cents. The refinery at Marsden Point is operating at only about half capacity after the national lockdown halted most aviation and initially slashed petrol and diesel demand by about 80 percent.

Z Energy edged 0.3 percent higher to $3.15, as investors anticipate a recovery in demand as more normal life resumes at level 2. The fuel retailer yesterday said fuel volumes were down about 55 percent in the week ended May 3, from pre-lockdown levels.

Vista Group International rose 0.8 percent to $1.21. It's offering its cinema customers a technology package to help them reopen, including managing self-serve, contactless transactions and ticketing to achieve social distancing. The offer is free through to at least Oct. 31.

Metlifecare rose 0.7 percent to $4.19. It said it anticipates holding a shareholder meeting to consider the scheme plan in late June or early July to approve an acquisition, despite the offer being terminated by Asia Pacific Village Group. Metlifecare's board has rejected the notice to terminate following legal advice.

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