Network issue cuts bullish day short

An upbeat session was cut short this afternoon as an internet connectivity issue halted trading on the NZX. Tourism Holdings had been leading the market higher on vaccine optimism.

Tuesday, August 25th 2020, 6:18PM

by BusinessDesk

The S&P/NZX 50 Index was trading up 72.11 points, or 0.6 percent, at 11,993.18 just before 4pm when the exchange lost its connection. Within the index, 30 stocks were up, 15 were down and five were unchanged. Turnover was $144.3 million.

The NZX was put in a trading halt after its network service provider encountered an issue this afternoon which impacted system connectivity this afternoon. The outage resulted in brokers being unable to access NZX’s systems or data via the internet.

Refinitiv confirmed stock exchange data was not updating and said an investigation was underway to confirm the scale and customer impact. A further update will be given to customers at 7pm.

Forsyth Barr’s director of institutional equities, David Price said the issue was extremely disruptive but was out of the NZX’s hands who are dependent on their internet provider.

“It is like having a car without the key,” he said. “We have offshore clients to report to and we run orders until the close and they get affected as well.”

Grant Davies, an investment adviser at Hamilton Hindin Greene, said this wasn’t the first time this had happened.

“It is just part and parcel with operating in this day and age, you are gonna have technical glitches every now and then.”

Davies said he could imagine scenarios where people would be disadvantaged by the sudden close, but for the most part it was just an inconvenience.

“If you miss out on a trade today then it is likely to be there tomorrow,” he said.

Before trading was halted, the market was following a lead from Wall Street, with both the S&P 500 and the Nasdaq continuing into new territory gaining more than 1 percent each.

Investors were optimistic after the US Food and Drug Administration authorised a blood plasma treatment for covid-19 and news came out that the Trump administration was considering fast-tracking an experimental covid-19 vaccine.

Before the disruption Tourism Holdings was leading the market, up 6.8 percent at $2.04, likely on the back of optimism around the treatment.

Other stocks trading well before the disruption included: internet infrastructure provider Chorus, up 4.1 percent to $8.545, Westpac Banking Group, up 4.1 percent at $19.53, Australia & NZ Banking Group, up 3.8 percent at $20.63, and Mercury NZ, up 3.3 percent at $5.225.

Davies said strong earnings results in recent days had helped to buoy investor sentiment.

Napier Port today forecast an adjusted full-year net profit of $20 million but said the trading environment is too uncertain to settle the size of its final dividend.

The port’s nine-month net profit rose 15 percent to $18.7 million but revenue fell 1.4 percent to $76.6 million. It shares were trading up 1.7 percent at $3.54 just before 4pm.

Outside the NZX 50, NZME said it was putting dividends on the table next year as it had lifted operating earnings 5 percent and cutting operating costs by 16 percent. It expects operating earnings of between $60 million and $63 million in calendar year 2020. Its share price leapt 44.8 percent to 42 cents following the announcement.

Currency trading was unaffected by the stock market's outage and the NZ dollar continued its downward trajectory, in what ASB economist Mike Jones called a “slow-burn depreciation” of the currency.

The kiwi dollar was trading at 65.24 US cents at 5pm in Wellington from 65.30 cents yesterday.

The trade-weighted index was at 70.63 at 5pm, down from 70.78 yesterday. The kiwi traded at 90.98 Australian cents from 91.14 cents, 69.14 yen from 69.12 yen, 55.24 euro cents from 55.36 cents, 49.79 British pence from 49.89 pence, and 4.5081 Chinese yuan from 4.5184 yuan.

Tags: Market Close