F&P Healthcare profit-taking drags NZX 50 down

New Zealand's headline share index fell today as ongoing coronavirus fears and end-of-month profit taking - notably Fisher & Paykel Healthcare - pushed the market down.

Friday, October 30th 2020, 7:29PM

by BusinessDesk

The S&P/NZX 50 Index fell 117.33 points, or 1 percent, to 12,084.47. Within the index, 25 stocks rose, 21 fell and four were unchanged. Turnover was $213.1 million.

The benchmark index struggled despite global equities stabilising overnight as its biggest constituent fell more than 5 percent.

Respiratory humidifier manufacturer F&P Healthcare has been acting as a counterweight to covid-19 related selling this week as the company benefits from increased sales throughout the pandemic.

This saw the NZX 50 edge higher on Wednesday and fall only half a percent on Thursday—when US markets had fallen more than 3 percent—as F&P Healthcare gained on both days.

But today the pendulum swung in the other direction, as trading updates from competitor ResMed threw doubt on whether the stock will see more sales from future outbreaks.

While the earnings result was strong, ResMed didn’t expect further growth to ventilator sales in the next calendar year, said Sam Trethewey, a portfolio manager at Milford Asset Management.

“They are not seeing a second wave of ventilator purchases and the market has reacted,” he said. “But I would make the point that F&P doesn’t sell ventilators, it sells humidifiers, so the comparison there is not clear cut.”

Fisher & Paykel Healthcare’s share price fell 5.4 percent to $35, a fall which was partly driven by profit taking, Trethewey said. The stock closed near where it started the week after climbing as high as $36.72.

Other stocks were mixed, with a roughly equal number of stocks rising and falling.

Port of Tauranga dropped 1.5 percent to $7.24 after it reported cargo traffic was down 5 percent in the September quarter. Napier Port rose 0.6 percent to $3.57.

Tourism Holdings held steady at $2.24 as investors were encouraged by news it was keeping costs low. Net debt has fallen from $188 million at the end of March to approximately $35 million.

Mercury NZ posted the day’s biggest gain, climbing 4.3 percent to $5.35. Trethewey said this was likely due to end of month rebalancing.

Outside of the top 50 companies, listed cannabis companies took a hit after preliminary referendum results indicated recreational cannabis would not be legalised.

Cannasouth fell 16.7 percent to 65 cents and Rua Bioscience dropped 2.9 percent to 66 cents. Both are medicinal cannabis companies and current operations should be unaffected by the referendum result.

The kiwi dollar was trading 66.34 US cents at 5pm in Wellington, down from 66.49 cents yesterday as the general shift from riskier currencies continued.

The trade-weighted index was at 71.36 at 5pm, from 71.51 yesterday. The kiwi traded at 94.07 Australian cents from 94.06 cents, 69.26 yen from 69.45 yen, 56.74 euro cents from 56.56 cents, 51.29 British pence from 51.12 pence, and 4.4326 Chinese yuan from 4.4623 yuan.

Tags: Market Close