Second vaccine sees investors eye recovery

New Zealand shares edged higher as a second promising vaccine caused investors to shift money into mid-size companies that have been slower to recover from the pandemic.

Tuesday, November 17th 2020, 5:56PM

by BusinessDesk

The S&P/NZX 50 Index rose 20.11 points, or 0.2 percent, to 12,765.03. Within the index, 29 stocks rose, 15 fell and six were unchanged. Turnover was $219.9 million.

Offshore markets were buoyed by news about Moderna’s vaccine, which a 30,000-patient study showed to be 94 percent effective, it is also easier to distribute than Pfizer’s version.

Only five patients who received the vaccine later developed covid-19, while in the control group there were 95 infections.

The news generated a reasonably modest reaction as markets had already climbed significantly on the Pfizer news last week.

In the local market, Fisher & Paykel Healthcare and several large utility companies cancelled the gains made by small companies who are still hampered by the virus.

“The ones that have benefitted during the pandemic are being sold off and there is a move towards reopening stocks,” said Greg Smith, head of research at Fat Prophets.

The dual-listed Australian banks led the market higher on a light volume. Banking is closely tied to economic conditions which are currently struggling due to the pandemic.

Australia and New Zealand Banking group rose 3.1 percent to $23.09 and Westpac Banking Corp advanced 2.8 percent to $20.25.

Z Energy jumped 2.8 percent to $3.27 as investors bet the vaccine would help clear a path for fuel volumes to recover to pre-covid levels. With international travel on hold, lower jet fuel consumption has been hurting revenue.

Air New Zealand increased 2.7 percent to $1.69 for the same reason. Smith said the stock had potential to push even higher, although it would remain below its pre-covid price of $2.80 for a long time.

Kathmandu Holdings climbed 2.4 percent to $1.29, SkyCity Entertainment was up 2 percent at $3.10, and Auckland International Airport rose 1.8 percent to $7.79.

Meridian Energy posted the day’s biggest fall, dropping 3.5 percent to $6.08, while internet utility firm Chorus also fell 2.8 percent to $8.60,

Smith said yield stocks held slightly less appeal after the market concluded the Reserve Bank had backed away from its plan to implement negative interest rates last week.

The index’s biggest stock, Fisher & Paykel Healthcare declined 1.2 percent to $34.20.

Investore Property rose 0.9 percent to $2.25 after reporting a 9.4 percent portfolio valuation gain to a shade off $1 billion, at $980.3 million.

Chair Mike Allen said the performance was testament to its focus on large format and retail property, and resilience to the impacts of covid-19.

The currency moves also reflected the confidence sentiment. Investors sold off the safe US dollar in favour of riskier assets, pushing the kiwi as high as 69.18 US cents.

The kiwi dollar settled in the afternoon and was trading 69.02 US cents at 5pm in Wellington, up from 68.77 cents yesterday.

The trade-weighted index was at 72.99 at 5pm, from 72.84 yesterday. The kiwi traded at 94.28 Australian cents from 94.35 cents, 72.12 yen from 71.88 yen, 58.20 euro cents from 58.02 cents, 52.19 British pence from 51.98 pence, and 4.5328 Chinese yuan from 4.5251 yuan.

Tags: Market Close