NZ shares rise as optimism over covid drug buoys Asia

New Zealand shares joined a rally across Asia, as upbeat investor sentiment spilled over from Wall Street's close on Friday on optimism over a late-stage trial for a hopeful covid-19 treatment.

Monday, July 13th 2020, 6:43PM

by BusinessDesk

The S&P/NZX 50 Index rose 39.93 points, or 0.4 percent, to 11,434.79. Within the index, 25 stocks fell, 18 rose, and seven were unchanged. Turnover was $149.3 million.

The positive sentiment from Wall Street on Friday night spilled over into Asia today. Australia’s S&P/ASX 200 was up 0.7 percent in late trading, Hong Kong’s Hang Seng gained 0.9 percent, Shanghai’s Composite Index was up 1.3 percent and Japan’s TOPIX climbed 2.2 percent.

ASB Bank economist Chris Tennent-Brown said markets were ignoring the rising number of new covid-19 cases and focusing on the emergence of possible treatments, such as Gilead’s remdesivir which was shown to support recovery in a field trial of 300 patients.

“We were always going to have a positive day,” said Mark Lister, head of private wealth research at Craigs Investment Partners.

The Friday rally on Wall Street with “high-flying tech stocks” hitting new records had given the local benchmark a solid start this morning, he said.

Internet infrastructure firm Chorus gained 2.8 percent at $7.27, recovering from a selloff on Friday when the Commerce Commission said it would review some regulations on the firm.

“Chorus was blindsided by those comments out of the Commerce Commission that added to the regulatory uncertainty, but it seems to have recovered some of those losses today,” Lister said.

Port of Tauranga posted the day's biggest gain, up 4 percent at $7.73 on a light volume 73,000 shares.

Spark New Zealand rose 2.2 percent to $4.70 and Vector advanced 1.1 percent to $3.65. Lister said they were gaining as investors sought reliable dividends as an alternative to the electricity sector.

Contact Energy increased 0.5 percent to $5.65, after dropping 16.1 percent last week after Rio Tinto announced it would close its aluminium smelter at Tiwai Point.

Other energy companies were weaker. Mercury NZ declined 0.2 percent to $4.67, Meridian Energy fell 0.2 percent to $4.50 and Trustpower slipped 0.4 percent to $6.87.

Summerset Group Holdings advanced 1.4 percent to $7.10 and Oceania Healthcare rose 1.1 percent to 96 cents, potentially benefitting from the possibility that Metlifecare will be taken off the share market if private equity firm EQT’s takeover offer at $6 per share is accepted.

Lister said investors who want to hold exposure to the retirement sector may be seeing Oceania as an attractive alternative. Metlifecare rose 0.7 percent to $5.88.

The benchmark was propped up by heavyweight stocks. A2 Milk Company increased 0.8 percent to $20.70 and Fisher & Paykel Healthcare gained 0.8 at $35.59, helping to prop up the index as a majority of stocks fell.

Restaurant Brands New Zealand posted the day’s biggest decline, falling 6.3 percent to $11.31 after an unexpected 4.3 jump on Friday.

Tourism Holdings fell 4.2 percent to $1.82, Auckland International Airport declined 2.2 percent to $6.10, Air New Zealand dropped 1.9 percent to $1.31 and Vista Group International fell 1.5 percent to $1.28.

“Virus flare-ups have reminded people we are not out of the woods yet. If you are in the tourism game or the movie theatre game, all those stocks are sensitive to lockdowns,” Lister said.

Outside the benchmark index, Augusta Capital's independent directors are unanimously recommending the takeover offer from ASX-listed Centuria in the absence of a higher offer.

Centuria is offering 22 cents in cash – raised from 20 cents on July 2 – and 0.392 Centuria shares for each Augusta share. At today’s closing price, which remained unchanged at 90 cents, that values the offer at 91 cents per share.

Tags: Market Close