Strong kiwi weighs on exporters pushing sharemarket down

New Zealand shares fell as a strong kiwi dollar weighed on export heavyweights Fisher & Paykel Healthcare and A2 Milk, pushing the market lower and giving back much of yesterday’s gains.

Tuesday, June 9th 2020, 7:37PM

by BusinessDesk

The S&P/NZX 50 Index dropped 225.47 points, or 2 percent, to 11,298.69. Within the index, 29 fell, 17 stocks rose, and four were unchanged. Turnover was $264.3 million.

The local benchmark was off the pace as stock markets across Asia followed Wall Street, where the Nasdaq hit an all-time high on optimism about the global recovery. That has helped push the kiwi dollar to a five-month high as investors return to risk-sensitive assets.

Australia’s S&P/ASX 200 Index gained 2.8 percent in afternoon trading, catching up after yesterday's Queen's Birthday public holiday there.

“Fisher & Paykel and A2 Milk are doing most of the damage,” said Grant Davies, an investment adviser at Hamilton Hindin Greene.

The two big exporters were the initial drag that turned the market, along with a number of property and yield stocks, he said.

F&P Healthcare led the market lower, falling 5.7 percent to $28.30. A2 Milk dropped 4 percent to $19.01.

The kiwi dollar has been on an upward trajectory since it bottomed out in March at a 10-year low. Since then, it's put on more than 10 US cents, trading around 65 US cents. That reduces the value of exports for the likes of F&P Healthcare and A2, which both generate large amounts of revenue in US dollars.

US-based donation company Pushpay also declined, down 0.6 percent at $7.

Property stocks were weaker. Precinct Properties New Zealand declined 2.3 percent to $1.71, Property for Industry fell 3.1 percent to $2.38, Goodman Property Trust dropped 2 percent to $2.23 and Kiwi Property Group decreased 2.2 percent to $1.145.

NZX fell 1.4 percent to $1.46 with 11.7 million shares traded. The bulk of that was in a single trade of 11.4 million shares at $1.40.

Spark New Zealand declined 2.1 percent to $4.39 with 6.2 million shares traded.

Auckland International Airport fell 3.6 percent to $6.95, more than offsetting yesterday’s 2.7 percent gain.

Still, the positive mood continued for some of the worst-affected companies which continued to recovery with investors happy to take on risk.

“There is some optimism out there for some companies that are purely focused on New Zealand as some investors think we are through the worst,” Davies said.

Sky Network Television posted the day's biggest gain, rising 8.8 percent to 18.5 cents. Air New Zealand rose 8.4 percent to $1.94 and SkyCity Entertainment Group increased 5.7 percent to $3.14.

Refining NZ advanced 3.3 percent to 95 cents and Z Energy rose 1.3 percent to $3.15.

Infratil today announced it would raise up to $300 million of new equity to help advance its growth plans and allow it to snap up opportunities through the recession. The infrastructure investment firm will offer new shares at $4.76, an 8 percent discount on the $5.175 price the stock closed at yesterday. The stock is now on a trading halt.

Davies said Infratil was taking advantage of the recovery to build a war chest for its existing development pipeline.

“In this volatile market it pays to make hay while the sun shines and raise capital while things are looking reasonably positive,” he said.

Tags: Market Close