NZ shares outperform weaker global markets

New Zealand shares edged higher today as positive earnings counterbalanced a weak lead from Wall Street as investors eyed escalating US-China tensions.

Friday, May 29th 2020, 6:33PM

by BusinessDesk

The S&P/NZX 50 Index rose 25.72 points, or 0.2 percent, to 10,882.41, taking the monthly gain to 3.3 percent. Within the index, 25 stocks rose, 22 fell, and three remained unchanged.

Turnover was $867.9 million with volumes boosted by the monthly reweighting of the MSCI Equity Indices. Fletcher Building, up 2 percent at $3.51, saw 82.7 million shares traded.

Stocks on Wall Street were weaker overnight after US President Donald Trump said he will hold a news conference to announce his response to China’s extension of control over Hong Kong.

Tensions between the US and China are becoming more animated as election polling in the US was tightening, said Shane Solly, a portfolio manager at Harbour Asset Management.

“A number of comments made by the president and the Republican Party have fired up a response from the Chinese, so there is some anxiety there,” he said.

Asian markets followed Wall Street's lead, with Hong Kong’s Hang Seng down 0.6 percent at 5pm in Wellington and Australia’s S&P 200 falling 0.7 percent. Markets on China’s mainland were flat.

New Zealand's stock market outperformed its peers as moderately positive updates from Vista Group International and Infratil helped support investor sentiment.

“We are seeing our market holding up against a little bit of weakness in global markets with some earnings results coming out better than expected,” Solly said.

While companies were still cautious about the outlook, New Zealand appeared to be re-opening its economy relatively strongly.

Vista rose 7.1 percent to $1.50. The cinema software company yesterday told shareholders it is starting to see a few green shoots of the business reviving. When planning a recent $65 million capital raising, the company assumed cinemas globally would remain closed for the rest of 2020 followed by a slow reopening through 2021.

Gentrack rose 0.7 percent to $1.43. The utility-software company today reported a 7 percent half-year revenue decline due to losing some UK energy-utility customers. It told investors earnings would improve in the second half.

Infratil fell 0.6 percent to $4.79, having spent most of the day stronger. Today it signalled a 30 percent earnings improvement from its CDC Data Centres investment in the current financial year. It maintained its dividend in the period.

Solly said the MSCI reweighting was pushing some stocks around as investment portfolios are reset to match the changes.

Pushpay Holdings led the market higher, rising 8 percent to $7.66. The stock shot upwards earlier this month after reporting increased demand for its online donation software during the United States shutdown. It is now up 81.6 percent this year.

Oceania Healthcare advanced 6 percent to 89 cents with 20 million shares traded.

Chorus rose 5.6 percent to $7.60, also likely benefitting from an increasing weighting. Its share price is up 21.2 percent this year with internet infrastructure seen as a safe harbour during the lockdown.

Meridian Energy fell 3.1 percent to $4.75, and is down 5.4 percent this year.

Sky Network Television rose 2.7 percent to 15 cents, with 33.3 million shares traded.

The Australian banks gave up some of yesterday’s spike as investors came to the view that banks had coped better than expected with the crisis. Westpac Banking Corp fell 1.6 percent to $19 and Australia & New Zealand Banking Group declined 1 percent to $19.60.

Solly said it was “one of the sharpest rallies in some time” as economic data suggested market had under-priced the banks and today investors were likely cashing in on those gains.

Among stocks outside the benchmark index, Rakon rose 10.4 percent to 26.5 cents after a group of minority shareholders pushed the directors to sell the company to international investors.

Comvita dropped 10.8 percent to $3.40 after completing a capital raising at $2.50 per share.

“That may or may not prove to be a sweet deal as the business restructures and becomes simplified,” Solly said.

Tags: Market Close