F&P Healthcare knocked by strong kiwi; covid saps stock market

Fisher & Paykel Healthcare was weighed down by a stronger kiwi dollar while the rest of the market was knocked about by uncertainty over the US election and latest surge in covid-19 infections.

Tuesday, October 27th 2020, 7:14PM

by BusinessDesk

The S&P/NZX 50 dropped 218.43 points, or 1.8 percent, to 12,251.91, joining a slump across Asia as investor confidence was dented by renewed fears over the recent spike in covid cases and US political uncertainty.

Within the index, 41 stocks fell, six rose, and three were unchanged, while turnover was $183.5 million.

US elections have been a major source of uncertainty for global investors in recent weeks as people question whether American policymakers will reach a deal on extending the covid fiscal stimulus package.

Retailer Kathmandu Holdings, which has operations worldwide, led the local market today, down 3.9 percent at $1.24.

The local selloff was broad-based, with no sector spared as Fletcher Building declined 2.8 percent to $4.13, Goodman Property Trust was down 2.8 percent at $2.42, and Genesis Energy fell 2.7 percent to $3.20.

F&P Healthcare, which has been a prime beneficiary of the covid pandemic given its makes components used in breathing respirators, fell 3.5 percent to $34.61.

Peter McIntyre, an investment adviser at Craigs Investment Partners, said the company has had a terrific run, with the shares up almost 93 percent over the past 12 months, and has tended to benefit from increasing covid numbers.

“It’s probably been dragged by the strength of the dollar against the US dollar,” he said.

The kiwi was unchanged at 66.89 US cents from 5pm on Monday, holding near a month high, while the trade-weighted index edged up to 71.72 from 71.68.

Not all exporters were under pressure from the stronger currency. Units in the Fonterra Shareholders’ Fund were up 0.9 percent at $4.43, while Tourism Holdings rose 2.5 percent to $2.43, posting the biggest gain on the top 50 index.

Serko fell 2.2 percent to $4.89 after saying its $10 million share purchase plan was oversubscribed two and a half times, prompting it to expand the offer to $20 million. Existing investors can buy the shares at a discounted $4.55.

Sky Network Television declined 0.7 percent to 15.4 cents and Spark NZ was down 0.8 percent at $4.555 after the pay-TV operator and telco announced a new bundling deal to sell the Sky Sport Now service. The two companies have been at odds over subscription sports services since Spark entered the market, but McIntyre said they both have content the other wants and the deal “makes a bit of sense.”

Meanwhile, Infratil fell 1.7 percent to $5.505. The infrastructure investment firm yesterday bought a controlling stake in Australian medical imaging company Qscan for A$330 million. The shares rose in Australia, where trading was open, but joined today’s decline.

McIntyre said the uncertainty over the upcoming US election will persist for the next week, but pointed out that there are some concerns about the threat of inflation re-emerging if the US fiscal stimulus deal gets over the line.

If bond yields start rising that will undermine the attraction of stock markets, which have hoovered up investor funds seeking real returns in a negative rate environment.

Interest rate differentials have been a major driver for the kiwi dollar against its Australian counterpart, with a rate review scheduled across the Tasman next week.

The kiwi traded at 93.77 Australian cents from 93.89 cents on Monday, and was unchanged at 70.04 yen. It edged up to 56.56 euro cents from 56.44 cents on Monday and was largely unchanged at 51.30 British pence from 51.27 percent. The kiwi rose to 4.4830 Chinese yuan from 4.4658 yuan on Monday.

Tags: Market Close