A2 Milk ends 11-day share market rally

New Zealand’s benchmark equity index snapped an 11-day rally, falling from yesterday’s record close of 12,765 following negative market updates from A2 Milk, Serko and Napier Port.

Wednesday, November 18th 2020, 6:24PM

by BusinessDesk

The S&P/NZX 50 Index fell 159.07 points, or 1.3 percent, to 12,605.96. Within the index, 33 stocks fell, 13 rose and four were unchanged. Turnover was $196.3 million.

BNZ’s Jason Wong said the market was trying to balance the positive medium-term outlook as vaccines are slowly rolled out, against short-term headwinds as the virus surges across the United States and Europe.

What may have been a modest correction became a sharp fall as investors were disappointed by updates from a number of listed companies.

The index’s second biggest stock, A2 Milk Company, fell 4.9 percent to $14.79 despite surging as high as $16.29 as the market opened.

Some investors had hoped the milk marketer would upgrade earnings guidance at its annual general meeting this morning. The company instead reiterated guidance and warned of more uncertainty ahead.

“Reading between the lines in their commentary, it feels like it could be a challenging few months and there is every chance they won’t get the second half rebound they are hopeful for,” said Mark Lister, head of private wealth research at Craigs Investment Partners.

Napier Port Holdings also fell 4.3 percent to $3.54 after giving some cautious forward guidance in its full year result. The port met its profit forecast at $20.4 million, but signalled next year’s earnings will be lower.

Travel management software company Serko dropped 3.4 percent to $5.41, after it reported a $10 million net loss in the six months through September due to travel restrictions during the pandemic.

Booking volumes were just 23 percent of pre-covid levels in the six months ended in September, but climbed to 35 percent in October.

Lister said he was surprised it had been sold so harshly as the result was in line with forecasts.

Other stocks from a wide range of sectors declined, including covid winners Fisher & Paykel Healthcare, which fell 1.5 percent to $33.70, and Pushpay Holdings with a 4 percent plunge to $7.19.

The companies worst affected by the pandemic also gave back recent gains, with both Z Energy and Air New Zealand falling 1.2 percent to $3.23 and $1.67 respectively.

Lister said investors were unsure what to make of the “push/pull nature” of having vaccines on the way, while current pandemic conditions were still deteriorating globally.

“Investors are just unsure how to play that, do they latch onto the vaccine positivity or do they focus on the here and now, where there is still quite a bit to worry about.”

Global logistics firm Mainfreight posted the day’s biggest gain, climbing 2.5 percent to $60.

Synlait Milk also rose, going in the opposite direction from its biggest customer A2 Milk, as it moved up 1.3 percent at $5.61.

The kiwi dollar gave up some ground as a fall in US equity markets on Tuesday night pushed the American currency higher.

The kiwi was trading at 68.87 US cents at 5pm in Wellington, down from 69.02 cents yesterday.

The trade-weighted index was at 72.82 at 5pm, from 72.99 yesterday. The kiwi traded at 94.46 Australian cents from 94.28 cents, 71.69 yen from 72.12 yen, 58.05 euro cents from 58.20 cents, 51.96 British pence from 52.19 pence, and 4.5139 Chinese yuan from 4.5328 yuan.

Tags: Market Close