Investor demand for reliable dividends wins the day

New Zealand shares rose as investors sought property stocks paying reliable dividends amid concerns over the covid-19 pandemic and heightened tensions between the US and China.

Tuesday, July 14th 2020, 6:03PM

by BusinessDesk

The S&P/NZX 50 Index advanced 59.35 points, or 0.5 percent, to 11,494.14. Within the index, 29 stocks rose, 17 fell, and four were unchanged. Turnover was $129 million.

Trading on the benchmark was volatile as investors swayed between the covid-19 outbreak worsening offshore and a more positive outlook in the domestic economy. Investor demand for reliable dividends won out as the NZX 50 ended the day stronger, having spent much of it in the red.

The local trading day started on the back foot after California's state government reinstated restrictions to slow the rise of coronavirus infections, and as the US and China traded barbs over the South China Sea. Asian markets were generally weaker with Hong Kong’s Hang Seng down 1.7 percent in late trading, Shanghai’s Composite index down 1.1 percent, and Australia’s S&P/ASX 200 falling 0.8 percent.

“The sentiment offshore was pretty soft overnight,” said Sam Trethewey, a portfolio manager at Milford Asset Management.

“California pulling back its reopening plans and US tensions with China are causing some profit-taking in the more volatile stocks locally,” he said.

Vista Group International has been among those whipped around by global fears over covid. It fell 6.3 percent to $1.20. Tourism Holdings declined 2.8 percent to $1.77.

Fishing company Sanford led the market higher, rising 4.4 percent to $6.60 on a typically light volume of 31,000 shares.

Chorus increased 3.9 percent to $7.55, extending its recovery from a pull back on Friday when the Commerce Commission suggested it would change the way the internet infrastructure firm can recognise losses.

Trethewey said investors were getting more comfortable with the commission’s announcement, and the stock has recovered 6.8 percent this week after it dropped 8 percent on Friday. Spark New Zealand, the network operator's biggest customer, rose 2.2 percent to $4.805.

SkyCity Entertainment Group rose 3.4 percent to $2.47 and Synlait Milk advanced 3 percent to $7.26.

The property sector saw strong gains with local tenants better able to make rents and property prices holding steady for now.

Goodman Property Trust climbed 2.8 percent to $2.22, Investore Property advanced 2.7 percent to $1.91, Precinct Properties New Zealand rose 1.8 percent to $1.68 and Kiwi Property Group was up 1 percent at $1.035.

F&P Healthcare increased 1.7 percent at $36.20 and A2 Milk rose 1.1 percent $20.93 - both stocks have benefitted through the lockdowns and may continue to do so.

Pushpay Holdings posted the day’s biggest decline, falling 8.4 percent to $8.46 after cornerstone shareholders, the Huljich family, sold a quarter of their stake, or 14.4 million shares, in an overnight block trade at $8.60 apiece for $123.8 million in total.

“The stock has been a beneficiary of covid and has run very hot over the last couple of months, so it is not surprising to see some of the large holders take some money off the table,” Trethewey said.

“They have been large holders for a long time and have retained 75 percent of their stake.”

Metlifecare rose 0.2 percent to $5.89. The company is under a takeover offer by EQT Group, which had tried to walk away from an earlier deal at $7 per share, only to be threatened with litigation.

“It is trading at a very tight premium to the $6 price which reflects a reasonable level of expectation that the deal will be done,” Trethewey said.

Tags: Market Close