Shares edge higher as Aussie border opens

New Zealand shares edged higher as Air New Zealand took off on Australian plans to open its border for quarantine-free travel from New Zealand.

Friday, October 2nd 2020, 9:08PM

by BusinessDesk

The S&P/NZX 50 Index increased 10.11 points, or 0.1 percent, to 11,822.84. Within the index, 27 stocks rose, 17 fell and six were unchanged. Turnover was $115.5 million.

Travel stocks led the market marginally higher in a mixed traded session as Australia’s deputy prime minister Michael McCormack said parts of the country would reopen its borders with New Zealand on Friday Oct. 16.

This saw shares in Air New Zealand surge 7.2 percent to $1.49 in the last 45 minutes of trading, with 3.3 million shares changing hands. The company is still down 50 percent year to date.

The open border is currently a one-way door, as Australians are not yet allowed to travel to New Zealand and Kiwis who do cross the Tasman will have to quarantine upon return.

Corporate travel software company Serko also jumped 5.8 percent to $4.77, driven by the result of their oversubscribed capital raise but also buoyed further by the partially opened border.

The company is currently operating at 30 percent of pre-covid activity and expects the biggest boost on its recovery to be the reopening of inter-state travel within Australia.

Today it completed a $47 million capital raising, selling new shares at $4.55, an almost 1 percent premium to its previous market close before the raise.

Mark Lister said the premium was not unheard of but was rare, especially for a business facing difficult conditions with travel restricted in key markets.

“I’d suggest it was a big vote of confidence from the market, the business is a really interesting and exciting one with a bright future in the long term,” he said.

Still, the NZX 50 was relatively flat on the day as Fisher & Paykel Healthcare gave back yesterday’s 2.5 percent gain following a Wednesday night rally for US healthcare stocks.

The respirator manufacturer fell 2.6 percent to $33.15 today.

A2 Milk Company stemmed its losses, rising 0.1 percent to $15.20 and bringing its loss for the week to about 15 percent.

The US indices posted another gain on Thursday night in a choppy session amid a stalemate on fiscal stimulus negotiations.

The gain didn’t carry through to NZ and Australia, with the S&P/ASX 200 down half a percent in late trading.

“No stimulus means risk sentiment will remain fragile and skewed to the downside,” said Stephen Innes, a global market strategist at Axicorp.

The lingering uncertainty saw the kiwi dollar slow its recent rally against the greenback while outperforming in most other major crosses.

The kiwi dollar was trading at 66.36 US cents at 5pm in Wellington, up from 66.27 cents yesterday but down from a high of 66.54 in the early hours of the morning.

The trade-weighted index was at 71.62 at 5pm, from 71.45 yesterday. The kiwi traded at 92.68 Australian cents up from 92.34 cents, 70.10 yen from 69.89 yen, 56.63 euro cents from 56.43 cents, 51.58 British pence from 51.23 pence, and 4.5057 Chinese yuan from 4.4996 yuan.

David Croy, an ANZ strategist, said the kiwi’s better performance against the Australian dollar suggested the market may be reconsidering which central bank is less dovish on monetary stimulus.

Tags: Market Close