NZ shares rise; index moves push Port of Tauranga to record

New Zealand shares rose as index changes drove heavy trading and large moves in the likes of Port of Tauranga and Kiwi Property Group. An upbeat earnings season also supported investor sentiment.

Friday, June 19th 2020, 6:17PM

by BusinessDesk

The S&P/NZX 50 Index rose 29.46 points, or 0.3 percent, to 11,254.74. Within the index, 26 stocks rose, 21 fell, and three were unchanged. Turnover was $427.6 million with new weightings in S&P/NZ indices and FTSE/Russell indices prompting large investors to adjust their portfolios.

The benchmark index gained more than 3 percent this week as investors looked past the threat of a second wave of covid-19 in favour of a better-than-expected earnings season.

Shane Solly, portfolio manager at Harbour Asset Management, said fears of a second wave had shifted which stocks investors were buying.

The “dash for trash” - as investors bought into the hard-hit stocks once the economy reopened - had slowed as the pandemic proved more persistent than some had hoped, he said.

The new virus flare-ups had put the brakes on the market, but central bank support and recent earnings results were strong enough to maintain momentum.

“Reporting season has been better than expected, companies in general have delivered less-worse results,” Solly said.

“It has been a more-buoyant reporting season and stock markets are reflecting that.”

Investors resetting their portfolios in line with the NZX 50’s quarterly reweighting was causing some significant share price movements today, Solly said.

Port of Tauranga led the market higher, rising 9.9 percent to an all-time high at $8.09 with 1.1 million shares traded. Solly said the stock had generally been performing strongly but today’s jump was driven by the index reweighting.

Sky Network Television rose 6.5 percent to 16.3 cents, Kiwi Property Group increased 6.4 percent to $1.08 and Kathmandu Holdings was up 5.1 percent at $1.24.

SkyCity Entertainment Group rose 4.8 percent to $2.85 as it continued to bounce back from recent lows after raising new capital this week. The casino operator had shown a reasonably strong recovery from the lockdown which reassured investors, Solly said.

Meridian Energy advanced 2.9 percent to $5.03 and Contact Energy increased 0.3 percent higher to $6.39 as investors digested strong generation numbers released yesterday.

Auckland International Airport rose 4 percent to $6.81, while Air New Zealand dropped 3.2 percent to $1.51.

Research analysts at Jarden today downgraded the airline to 'underperform' and set a target price of 85 cents. A note to clients said that without a capital injection the airline would have to begin using the government’s $900 million loan in financial year 2021.

“We continue to view Air New Zealand as having a heavily skewed risk and reward at the current share price,” the analysts said. “Investors should remain watchful of the very real prospect of material shareholder dilution.”

Gentrack posted the day’s biggest loss on its last day of trading as part of the NZX50 index, falling 4.5 percent to $1.50. It is up 9.8 percent this month but down almost 60 percent this year.

Napier Port Holdings, which replaces Gentrack from Monday, rose 2.6 percent to $3.90.

A2 Milk declined 2.5 percent but is up more than 8 percent to $20.33 this week following the announcement last Friday that it would be included in the S&P/ASX 50 Index.

Outside the benchmark index, Eroad rose 11.9 percent to $3.29 after reporting a 32 percent lift in annual revenue. The company said it expects slower growth in recessionary conditions through the 2021 financial year.

Metro Performance Glass fell 6.4 percent to 22 cents after reporting an annual loss of $77.9 million. It wrote down goodwill by $86.5 million because of increased competition, the impact of covid-19 and because it expects lower construction activity for the next 12 to 24 months.

Solly said Metro’s share price had been “smashed” by the result as it illustrated how tough the current trading environment could be.

Tags: Market Close