Domestic bellwether stock Freightways leds NZX lower

New Zealand's benchmark stock index crept lower as investors took risk-off positions in the lead up to the extension of the covid-19 lockdown in Auckland. Domestic bellwether stock Freightways led the market lower.

Friday, August 14th 2020, 7:03PM

by BusinessDesk

The S&P/NZX 50 Index fell 48.68 points, or 0.4 percent, to 11,452.14. Within the index, 32 stocks fell, 12 rose and six were unchanged. Turnover was $172 million.

The looming lockdown cast a shadow over the NZ market as the index waned ahead of Prime Minister Jacinda Ardern's 5:30pm announcement that alert level 3 in Auckland would be extended for 12 days. She said there is nothing to suggest a move to alert level 4 was necessary.

The kiwi dollar dipped to 65.29 US cents after the announcement before returning to about 65.35 cents where it had been at 5:30pm. It had closed at 65.62 cents yesterday.

Grant Davies, an investment advisor at Hamilton Hindin Greene, said investors had made modest adjustments to their portfolios as most of the lockdown correction had already occurred.

“Some of those usual suspect stocks are being sold off again as people try to guess and price in the result of this evening's update,” he said before the lockdown extension. “But a lot of that selling was done on Wednesday and now we are tracking the global market more broadly.”

The S&P 500 Index and the Dow Jones Industrial Average both closed around 0.3 percent lower overnight, while the Nasdaq edged higher. Asian markets largely followed suit with MSCI Asia Index down 0.2 percent.

Davies said most investors had anticipated an extension so there may be a muted reaction on Monday.

Stocks that are either directly impacted by lockdowns or that are indicators of the domestic economy took the biggest falls.

Freightways, a logistics company tightly linked to local economic activity, led the market losses as it dropped 3.2 percent to $6.76.

Heartland Group Holdings, a regional banker that may be vulnerable to mortgage defaults, fell 1.7 percent to $1.17.

Retail property investor Kiwi Property Group declined 2.5 percent to 97.5 cents. Large-format retail property owner, Investore Property, which includes supermarkets and hardware stores among its portfolio, held at $1.99.

“Sylvia Park is a massive part of Kiwi Property Group’s assets, so lockdown will have a big impact that investors are trying to price in,” Davies said.

Aged-care providers saw some losses as investors were concerned about exposure to elderly communities which are vulnerable to covid-19. Arvida had the sector’s biggest loss, falling 2.6 percent to $1.49.

NZX Limited dropped 1.9 percent to $1.54 after it gained yesterday on a strong earnings result.

Davies said the exchange’s share price had risen in recent months as investors anticipated the result but may be unsure if the result would be repeated in future, less volatile years.

Mark Smith, an economist at ASB, said the new cases of covid-19 were putting downward pressure on the kiwi dollar but positive medium-term fundamentals were still providing support.

The trade-weighted index was at 70.94 at 5:30pm from 71.20 late yesterday.

The kiwi traded at 91.34 Australian cents from 91.60 cents yesterday, 69.83 yen from 70.07 yen, 55.30 euro cents from 55.60 cents, 50.02 British pence from 50.28 pence, and 4.5394 Chinese yuan from 4.5553 yuan.

Tags: Market Close