NZ shares rise as THL bolsters sentiment

New Zealand shares edged higher with Tourism Holdings leading the market after an upgrade to its earnings helped insulate investor sentiment from a one-week extension to current covid restrictions.

Monday, September 14th 2020, 6:58PM

by BusinessDesk

The S&P/NZX 50 Index rose 42.51 points, or 0.4 percent, to 11,790.54. Within the index, 22 stocks rose, 15 fell and 13 were unchanged. Turnover was $140.6 million.

Prime Minister Jacinda Ardern announced Cabinet had decided to extend current alert levels until at least next Monday, and said ministers agreed in principle to lower restrictions then if virus conditions had not deteriorated.

“The news today wasn’t fantastic in terms of extending the pain for businesses a bit longer,” said Greg Smith, head of research at Fat Prophets.

However, the market was largely unmoved, trading only slightly lower in the afternoon than in the morning, as investors were either expecting an extension or just less worried about restrictions.

“The announcement from Tourism Holdings showed even businesses at the coal face of tourism can push through and exceed guidance,” Smith said.

Tourism Holding upgrading its expected full-year profit—from a mid-point of $18.5 million to about $20 million—reinforced the view that many listed companies were handling the crisis better than initially expected, Smith said.

The campervan rental company led the market higher, rising 12.9 percent to $2.19 recovering from a 10 percent drop across last week.

Air New Zealand followed its lead, rising 1.1 percent to $1.345, likely helped by the Prime Minister’s announcement physical distancing would no longer be required, allowing the airline to fill every seat on a flight.

Auckland International Airport rose 0.6 percent to $7.05 and travel booking company Serko, which is next in line to join the index, rose 0.5 percent to $4.25.

Equity markets on Wall Street had a stronger night on Friday but investors were still rotating away from the tech sector, Smith said. The trend didn’t hold for local technology stocks, of which the NZX has relatively few.

Pushpay Holdings rose 2.7 percent to $7.70, after losing 3.9 percent last week, and Vista Group International rose 0.6 percent to $1.83.

The index’s two biggest names diverged, A2 Milk Company fell 1.1 percent to $17.72 and Fisher & Paykel Healthcare rose 0.3 percent to $33.20. The fifth biggest company, Spark New Zealand, was the most traded with 7.4 million shares changing hands. Its price was unchanged at $4.77.

Sky Network Television also had a volume above 7 million shares as the stock continues to attract attention following its rise and fall surrounding its earnings result last Thursday. The stock is up 2 percent at 15.3 cents today, but down almost 80 percent this year.

Kathmandu Holdings posted the day’s biggest loss, falling 2.5 percent to $1.16, followed by New Zealand Refining which fell 1.5 percent to 64 cents — adding to its 4.4 percent loss across last week.

In currency markets, the kiwi dropped as low as 66.39 US cents over the weekend as equity market volatility provided the greenback with some support, but it rallied as local sentiment improved.

The kiwi dollar was trading 66.95 cents at 5pm in Wellington, up from 66.61 cents on Friday evening.

The trade-weighted index was at 72.07 at 5pm, from 71.79 on Friday. The kiwi traded at 91.91 Australian cents from 91.52 cents, 70.98 yen from 70.71 yen, 56.50 euro cents from 56.27 cents, 52.23 British pence from 51.95 pence, and 4.5726 Chinese yuan from 4.5548 yuan.

Later this week, the pre-election economic and fiscal update will be released on Wednesday and the quarterly GDP report, which is expected to show the biggest decline in recorded history, on Thursday.

Tags: Market Close