Shares soar amid flurry of local news

Most New Zealand shares rose amid a flurry of mixed news from local companies and increasing confidence shown by offshore investors.

Wednesday, November 25th 2020, 10:42PM

by BusinessDesk

The S&P/NZX 50 Index rose 114.60 points, or 0.9 percent, to 12.667.98. Within the index, 29 stocks rose, 15 fell and six were unchanged. Turnover was $280.3 million.

Overnight, US financial markets continued to trade on the expectation that vaccines could mean 2021 would be a return to normal, with further encouragement coming from President-Elect Joe Biden naming a dovish former chair of the US Federal Reserve as his treasury secretary.

On the home front, investors’ attention was largely absorbed by a wave of announcements, results, and annual general meetings from NZX-listed companies.

Meridian Energy led the market higher, suddenly jumping 5 percent to $6.30 as it made a late break in afternoon trading. The stock had previously been in decline as interest rates moved higher, making the electricity company’s hefty price tag harder to justify.

Mercury NZ climbed 3 percent to $6.015 and Vector was up 2.1 percent at $4.33.

Fletcher Building jumped 3.7 percent to $5.88 after chief executive Ross Taylor told the annual shareholders' meeting to expect up to a 46 percent increase in first-half operating earnings.

The statement affirms a trading update from earlier in the month, but the construction firm still isn’t providing full-year guidance.

“It is more of a momentum thing here,” said Peter McIntyre, an investment adviser at Craigs Investment Partners.

“There has been a move out of yielding stocks into more industrial related stocks, that has been a global theme. Fletcher is probably seen as a value stock in New Zealand, or even a recovery stock.”

Other companies continued to benefit from investment rotation towards value.

Vista Group International was up 3.5 percent at $1.80, Air New Zealand gained another 2.4 percent at $1.89, and Auckland International Airport rose 1.8 percent to $7.80 — all buoyed by the swiftly progressing vaccines.

However, Tourism Holdings posted the day’s biggest fall down 2.3 percent at $2.58.

Fisher & Paykel Healthcare dropped 1.5 percent to $33.55, despite reporting a record first-half result and lifting its full-year guidance to $1.7 billion in annual revenue.

Shares in the medical device maker initially jumped on the news, but later reversed to finish the day weaker.

“Sometimes you have investors sell into the good news, and that has definitely been happening this afternoon,” McIntyre said.

“But some of it is that there has been good vaccine news and a lot of profitability for Fisher & Paykel has come from the continuation of covid.”

Vital Healthcare Property Trust fell 0.9 percent to $2.92 as it was caught up in yield stock weakness.

The property investor announced it had bought Grace Hospital in Tauranga. The $95 million investment was funded as part of an equity raising in October and will provide a rental yield of 5.25 percent.

Stride Property was put in a trading halt at $2.30 as it seeks to raise up to $220 million to help fund the purchase of two Wellington properties, including a $228 million purchase of 20 Customhouse Quay.

Goodman Property Trust held at $2.38, buoyed by the news its redevelopment in Mt Roskill was expected to have a value well in excess of $200 million once completed.

The kiwi dollar was trading at 69.81 US cents at 5pm in Wellington, up from 69.68 cents yesterday.

Mike Jones, an economist at ASB Bank, said the currency was likely to be well supported at this level as the market is now convinced the official cash rate will not be taken lower.

The kiwi dollar also gave up yesterday’s gains against the Australian dollar, falling to 94.88 Australian cents from 95.26 cents.

The trade-weighted index was at 73.70 at 5pm, from 73.73 yesterday. The kiwi traded at 72.93 yen from 72.86 yen, 58.62 euro cents from 58.83 cents, was unchanged at 52.26 British pence, and traded at 4.5915 Chinese yuan from 4.5865 yuan.

Tags: Market Close