NZ shares flat as strong kiwi saps rally

New Zealand's main share index was flat as a stronger kiwi dollar crimped interest in exporters such as Fisher & Paykel Healthcare, while other parts of the market rallied.

Wednesday, December 2nd 2020, 6:58PM

by BusinessDesk

The S&P/NZX 50 Index fell 1.2 points, or 0.01 percent, to 12,728.69. Within the index, 25 stocks rose, 16 fell and nine were unchanged. Turnover was $180.2 million.

With the majority of stocks moving higher on the day, exporters dragged the index marginally into the red.

The kiwi dollar took another step upwards, hitting 70.72 US cents at 5pm in Wellington from 70.34 cents yesterday. While the strong kiwi is indicative of investors’ confidence in global economic recovery, it is a headwind for exporters.

The index’s largest stock, F&P Healthcare, which distributes a large share of its products in the United States, fell 1.6 percent to $34.95.

Vista Group International which collects revenue from cinemas around the world - when they are not closed due to the pandemic - also declined 1.7 percent to $1.72.

But the biggest decline came from milk powder manufacturer Synlait Milk slipping 3.2 percent to $5.17, with a smaller slide from its key customer A2 Milk, down 1.3 percent percent at $14.02.

Peter McIntyre, an investment adviser at Craigs Investment Partners, said rising diplomatic tensions between Australia and China may be weighing on exporters who rely on those markets.

The mood on the rest of the index was less gloomy with 12 stocks gaining more than 1 percent.

Cancer diagnostics firm Pacific Edge took the biggest leap, up 7.1 percent at 75 cents, after investment bank Jarden began analyst coverage with a bullish call. They said the stock could double in value to $1.40 in the next 12 months.

“That upgrade has pushed their share price up, on pretty reasonable volume as well,” McIntyre said.

Heartland Group Holdings climbed 3.4 percent to $1.53, as investors continued to respond to Monday’s investor update which showed the lender tracking ahead of expectations.

“That has given investors confidence to buy the stock and confidence around the dividend as well, once the Reserve Bank lifts the restrictions,” McIntyre said.

“They also flagged the possibility of separating out the motor business as a separate entity, the market has decided they like all those things.”

Investors can also look forward to seeing some new names on the NZX board. The exchange revealed in an investor day presentation there would be a new direct listing and another foreign exempt listing in December.

The company also reiterated operating earnings would be near the top of its guided range, near $33 million. While the share price fell half a percent to $1.84, it was already trading at elevated levels.

In currency markets, the kiwi dollar took more ground from the Aussie reaching 95.79 Australian cents, up from 95.48 cents yesterday.

The trade-weighted index was at 74.35 at 5pm, from 74.19 yesterday. The kiwi traded at 73.82 yen from 73.45 yen, 58.53 euro cents from 58.81 cents, 52.68 British pence from 52.65 pence, and 4.6337 Chinese yuan from 4.6265 yuan.

Tags: Market Close