Reeling from cyber attacks, NZX 50 shuffles to record

New Zealand shares eked out a record close as investors caught up for lost time after a string of cyber-attacks left the local market open for just five hours in the past two sessions.

Friday, August 28th 2020, 7:07PM

by BusinessDesk

The S&P/NZX 50 Index rose 40.09 points, or 0.3 percent, to 12,093.52. Within the index, 27 stocks rose, 18 fell and five were unchanged. Turnover was higher than usual at $249 million.

The benchmark index closed at a record after gaining 1.8 percent across the week. It was largely flat on the day as investors absorbed mixed earnings results from the past two days.

The exchange has been hit with daily distributed denial of service attacks since Tuesday which have shut down trading for almost half of last four sessions.

Yesterday, the market was open for just one hour before the exchange was pulled offline for the rest of the day. Trading was expected to resume this morning, but a new attack delayed the market open until 1pm.

The attacks landed in the biggest week of earnings season, pulling attention away from the 10 companies in the top 50 reporting earnings.

“There has been a lot going on even without the NZX issues. This week is really busy for New Zealand and Australian results,” said Stuart Williams, head of equities at Nikko Asset Management.

Williams said the outages had been disruptive, but price discovery had not been materially affected because many of the larger companies were also listed on the Australian exchange.

Vista Group International led the market higher, up 8.7 percent at $1.75, extending its leap following an encouraging earnings report yesterday morning. The stock has gained almost 30 percent in the past two days.

Meridian Energy was up 2.8 percent at $5.32 bringing its gain since reporting on Wednesday to almost 5 percent. Vector gained 4.2 percent to $4.44 today.

Other heavyweight stocks helped the index rise: Fisher & Paykel Healthcare was up 1.9 percent at $37.68, and Mainfreight rose 2.2 percent to $48.54.

However, A2 Milk Co fell 4 percent to $19.30 posting the biggest loss of the day as investors reacted negatively to executives selling down their holdings.

Nikko’s Williams said investors shouldn’t read into the selloff too much.

“There are short windows when management is allowed to sell, and you just have to accept that is the case,” he said.

NZX Ltd dropped 3 percent to $1.64 after a week of cyber-attacks rocked investor confidence in the company, Williams said.

“They’ll be doing a lot of soul searching and figuring out where they need to spend more money to make the system solid. We can’t have this going on.”

The exchange’s network provider, Spark fell 1.4 percent to $4.86. Williams said it was the lower range for the earnings guidance that was putting investors off, rather than the cyber-attacks, but emphasised a wide guidance should be expected in the covid-era.

“They’ve done incredibly well to issue guidance for 2021. There’s an attractive yield stock in a company that we all understand, with proven management,” he said

Air New Zealand fell 2.5 percent to $1.38. Williams said Air New Zealand’s management was doing an “incredible job in an awful environment”.

“But it doesn’t hide the fact that social distancing on an airplane is crippling from a financial point of view,” he said.

In currency markets, the kiwi dollar was trading at 66.62 US cents at 5pm in Wellington, up from 66.23 cents yesterday.

The trade-weighted index was at 71.71 at 5pm, from 71.45 yesterday. The kiwi traded at 91.34 Australian cents from 91.50 cents, 71.08 yen from 70.17 yen, 56.10 euro cents from 55.97 cents, 50.25 British pence from 50.14 pence, and 4.5807 Chinese yuan from 4.5582 yuan.

Tags: Market Close