Mainfreight leads shares higher

Global logistics firm Mainfreight led New Zealand shares higher as the index chalked up its eleventh straight day of gains.

Wednesday, October 14th 2020, 6:30PM

by BusinessDesk

The S&P/NZX 50 Index rose 89.76 points, or 0.7 percent, to 12,543.61. Within the index, 15 stocks fell, 28 rose and seven were unchanged. Turnover was $183.1 million.

The NZX was the only major share market in Asia to climb, with most global investors taking a more cautious approach as the likelihood of fast fiscal stimulus in the US once again faded.

Peter McIntyre, an investment advisor at Craigs Investment Partners, said the index’s upward streak was almost unprecedented in recent years — in November 2014, the NZX 50 made 12 consecutive gains.

“It’s a good reminder that a lot of gains for a whole year can sometimes be concentrated in 14 or 15 trading days,” he said.

Mainfreight led the market higher, rising 5.8 percent to $51.30 after posting a “stunner” trading update showing pre-tax profit up 23.4 percent and revenue up 7 percent in the past 26 weeks.

“The market also likes the fact that they are taking a conservative approach to capital expenditure,” McIntyre said.

McIntyre said unless Mainfreight wants to be the first hundred-dollar stock on the exchange it must be considering doing a stock split.

The next most expensive stock is Fisher & Paykel Healthcare, priced at $35.75 after making a 1.1 percent gain today.

Movers

A2 Milk Company rose 0.9 percent to $16.26, as it continues to rebound from its lows. Key supplier Synlait Milk also rose 0.9 percent to $5.60.

Some investors had confidence in the company’s future cash flow and were seeing the first-quarter earnings downgrade as a short-term blip, McIntyre said.

Infratil advanced 2.9 percent to $5.31, potentially gaining due to investors recognising the importance of the Trustpower stake in its portfolio.

“Trustpower has risen quite significantly on the back of both Labour and National indicating they are going to support New Zealand Aluminium Smelters for a longer period,” said McIntyre.

“But since Trustpower is quite tightly held, it doesn’t trade in big volumes. So, I think some investors are seeing the intrinsic value of Trustpower in the overall Infratil portfolio.”

Shares in cancer diagnostics company Pacific Edge got an index bounce, leaping 12.3 percent to 73 cents on the news it will be added to the NZX 50 to replace Metlifecare when its takeover by private equity is complete.

“It means it will get more coverage and get picked up by index funds, not only in New Zealand but globally as well,” McIntyre said.

Ike

Also outside the top 50, IkeGPS Group soared 22.2 percent to $1.10 on news of a significant new commercial relationship with a major US-based utilities provider with annual revenues exceeding US$30 billion.

News that Johnson & Johnson had delayed their vaccine trial caused travel stocks to fall. Air New Zealand fell 1.3 percent to $1.51 and Auckland International Airport declined 0.7 percent to $7.45.

Westpac Banking Corp posted the day’s biggest loss, falling 2.5 percent to $20.04.

The kiwi dollar was trading at 66.60 US cents at 5pm in Wellington, up from 66.42 cents yesterday.

“It ticked up from where we opened, but broadly over the course of this week 66.50 has been an anchor point and the kiwi has just drifted either side of that,” said Mike Shirley, a senior trader at Kiwibank.

The currency held fairly steady, despite some afternoon volatility as traders reacted to a speech by Reserve Bank assistant governor Christian Hawkesby.

The trade-weighted index was at 71.55 at 5pm, from 71.34 yesterday. The kiwi traded at 92.86 Australian cents from 92.57 cents, 70.22 yen from 70.00 yen, 56.70 euro cents from 56.32 cents, 51.48 British pence from 50.93 pence, and 4.4882 Chinese yuan from 4.4849 yuan.

Tags: Market Close