NZ shares gain in light trading as investors eye US-China tension

New Zealand shares rose in light trading ahead of public holidays in the US and UK, as investors remain wary of growing tensions between the US and China.

Monday, May 25th 2020, 6:00PM

by BusinessDesk

The S&P/NZX 50 Index advanced 113.17 points, or 1.1 percent, to 10,775.80. Within the index, 33 stocks rose, 11 fell and six were unchanged. Turnover was $74.4 million, the lowest since January.

The local market started the week on a tentative note as investors continued to digest China's decision last week to scrap its annual growth target. Separately, Chinese lawmakers seeking greater control over semi-autonomous Hong Kong aggravated an already tense relationship with the US.

Hong Kong's Hang Seng index fell 1 percent today after the US responded by threatening to sanction the city and undermine its status as a financial hub.

However, the New Zealand and Australian markets followed a warm lead from Wall Street, which performed a last-minute U-turn on Friday night to close marginally higher despite trading weaker throughout most of the session. The S&P/ASX 200 was up almost 1.5 percent in afternoon trading.

Michael McCarthy, chief market strategist at CMC Markets, said he was surprised to see such a strong Australasian performance considering the risks that come with rising tension between the US and China.

“Given the comments from the US Secretary of State saying they are considering removing Hong Kong’s special trading status — this looks like escalation to me,” he said.

McCarthy said trading volumes were lighter than usual as Singapore, the United Kingdom and the United States were all on public holidays today.

“It may just be that there is a little bit of room for the bulls to move this morning,” he said.

Oceania Healthcare led the local market higher, rising 3.8 percent to 83 cents.

Grant Williamson, a director at Hamilton Hindin Greene, said the aged care provider started to gain last week and has built up some momentum.

“It was one stock that was hit extremely hard in the sell-off and maybe bargain hunters are just coming back for it,” he said. Its share price is still down 36 percent this year.

Z Energy rose 3.6 percent bring it back up to its capital raising price of $2.90. Williamson said it was an encouraging sign for the fuel retailer who has yet to compete the retail portion of the capital raising.

Fisher & Paykel Healthcare increased 3.3 percent to $30.15 and A2 Milk rose 1 percent to $19, although both on light volumes.

Kiwi Property Group rose 2.1 percent to 96 cents. The company reported a net loss of $186.7 million as an already announced $290 million write-down in its property values hit the bottom line. The property investor said retail traffic at its shopping malls has recovered under level 2 restrictions, and was down just 8 percent from a year earlier.

Williamson said the net loss was no surprise to the market, with investors taking the result as good news.

Infratil increased 1.3 percent to $4.77. Tilt Renewables, which is controlled by Infratil, rose 0.3 percent to $3.15 after reporting a net profit of A$478.4 million as the wind farm developer benefited from the sale of a wind farm for a A$486 million gain. Tilt shareholders will vote to approve a capital return next month.

Air New Zealand rose 0.8 percent to $1.255. It extended its schedule of minimal international operations by another two months to Aug. 31. Overall international capacity is down around 95 percent.

Auckland International Airport also rose, gaining 3.1 percent at $5.98.

Sky Network Television today completed the first phase of a capital raising, bringing in $119.2 million from investors to shore up its balance sheet. The television network’s shares dropped 48.2 percent to 17.1 cents when trading resumed, still comfortably above the 12-cent placement offer.

“Obviously, the company is still in a pretty depressed state and existing holders and investors will be hoping this capital raise will be what turns around the performance of the company,” Williamson said.

Tags: Market Close