NZ shares fall on Ryman result and strong currency

New Zealand's main share index fell as Ryman Healthcare’s weak half-year result took some heat out of the retirement village sector, while the soaring kiwi dollar put pressure on exporters.

Friday, November 20th 2020, 7:07PM

by BusinessDesk

The S&P/NZX 50 Index fell 115.32 points, or 0.9 percent, to 12,441.81. Within the index, 26 stocks fell, 19 rose and five were unchanged. Turnover was $150.1 million.

Retirement village operator Oceania Healthcare led the market lower, falling 3.7 percent to $1.30, but the real culprit for the weakness in the sector was Ryman Healthcare who reported weaker underlying profit of $88.4 million.

Retirement stocks have been steadily climbing this year as surging house prices push up the value of their housing units and the land they are built on.

Ryman’s net profit was up 12.8 percent during the past six months, but only due to the unrealised value of its properties increasing. The more tangible underlying figure was dragged down by the firm spending $50 million to successfully protect residents and staff from the covid-19 pandemic.

“There does look to be a reasonably solid outlook from here thanks to the housing boom,” said Matt Goodson, managing director at Salt Funds Management. “But the whole sector had already moved up aggressively as the market hasn’t missed the fact house prices are rising.”

Ryman Healthcare dropped 2.5 percent to $15.13 and Summerset Group Holdings fell 2.2 percent to $10.51, while Arvida Group held at $1.80.

The kiwi dollar has been sitting above 69 US cents for much of the past three days, trading at 69.18 US cents at 5pm in Wellington, up from 69.01 cents yesterday.

The currency hasn’t held at this level since the first quarter of 2019 - when it traded around a midpoint of 68 US cents - and is causing a headache for exporters who are seeing their margins eaten up by the exchange rate.

“A lot of the moves probably have a degree of randomness to them, but the strong kiwi dollar is starting to impact some of those pure-play kiwi dollar earners,” Goodson said.

Fishery company Sanford fell 2.2 percent to $4.94 today and has been tracking lower across the week as the kiwi crept up.

Fellow food exporter Scales Corporation climbed 0.4 percent to $4.82 today, but has dropped from $4.98 since last week, and Fisher & Paykel Healthcare has had a steady decline from near $35 on Monday to finish at $33.02 after falling another 2.3 percent today.

The trade-weighted index was at 73.20 at 5pm, from 73.09 yesterday. The kiwi traded at 94.94 Australian cents from 94.66 cents, 71.82 yen from 71.59 yen, 58.25 euro cents from 58.28 cents, 52.16 British pence from 52.17 pence, and 4.5500 Chinese yuan from 4.5317 yuan.

Travel software company Serko rallied 5.7 percent to $5.60, the day’s biggest gain, after South Australia’s one-week lockdown was scrapped after less than two days.

The reversal came after it was discovered one person who contracted the virus had lied to contact tracers, leading them to believe the new outbreak was more serious than it really was. Air New Zealand and Z Energy, which are exposed to travel, both climbed 1.5 percent to $1.705 and $3.30, respectively.

Tags: Market Close