NZ shares buoyed by Mainfreight's upbeat outlook

New Zealand shares were led higher by Mainfreight after the logistics group's earnings weathered the worst of the covid-19 crisis at a time when investors grow more optimistic about the global economy reopening.

Wednesday, May 27th 2020, 7:11PM

by BusinessDesk

The S&P/NZX 50 Index rose 134.45 points, or 1.2 percent, to 11,049.19. Within the index, 38 stocks rose, 10 fell and two were unchanged.

Mainfreight led the market higher, up 13.9 percent at $41 after keeping its final dividend unchanged and reporting a small increase in annual underlying earnings. Its result was pushed around by new accounting rules.

Sam Dickie, a senior portfolio manager at Fisher Funds, said Mainfreight’s ability to weather the covid crisis meant the firm would come out stronger than it went in. This put the logistics firm in a category with other winners such as A2 Milk and Fisher & Paykel Healthcare.

A2 fell 1.4 percent to $18.94 and F&P Healthcare declined 0.6 percent to $30.81.

Sam Trethewey, a portfolio manager at Milford Asset Management, said Mainfreight's earnings coincided with growing optimism from international investors that the worst of the economic crisis had passed,

The two dual-listed Australian banks also saw double-digit gains today. The sector has lagged behind the broader market throughout the crisis as the spectre of debt defaults and another global financial crisis caused investors to steer clear.

Australia & New Zealand Banking Group jumped 11.9 percent to $19.59 and Westpac Banking Corp rose 10.9 percent to $19.19. Both companies are still down more than 24 percent this year.

Trethewey said the financial sector had fallen and stayed down until it caught the attention of investors looking for the next opportunity.

“The financial sector had underperformed materially post-covid. Today investors had the confidence to get back onboard and it has happened in a big aggressive way.”

This sudden rush on the financial sector was driven by a similar trend on Wall Street overnight where investors moved out of tech companies and into financial stocks. The S&P 500 rose 1.2 percent overnight while the tech-heavy Nasdaq edged up just 0.2 percent.

The Australian financial sector pulled the ASX into positive territory. The S&P/ASX 200 was trading up 0.4 percent at 5pm in Wellington. Australia’s third largest bank - National Australia Bank - more than doubled its capital raising offer from A$500 million to A$1.25 billion citing strong demand from retail shareholders.

Fletcher Building rose 4.8 percent to $3.43. Trethewey said this was another example of investors' willingness to take on risk, sensing opportunity in the harder hit stocks.

Air New Zealand increased 4.2 percent to $1.375 and Auckland International Airport advanced 3.5 percent to $6.54, with speculation that a trans-Tasman bubble may arrive earlier than expected.

Tourism Holdings increased 0.7 percent to $1.55, while SkyCity Entertainment Group fell 2.7 percent to $2.50, posting the day's biggest loss.

Z Energy gained 0.3 percent at $2.94, as fuel volumes continue to recover and Refining NZ rose 1.4 percent to 72 cents.

Courier company Freightways increased 0.7 percent to $6.95.

Trustpower declined 2.2 percent to $7.14. New Zealand’s fifth-largest energy retailer today reported a 16 percent drop in earnings to $186.5 million for the March year. The company also trimmed its final dividend by 1.5 cents a share, holding back about $4.7 million for extra flexibility.

Tags: Market Close