NZX 50 falls as investors get ready for summer

New Zealand's main stock index and the kiwi dollar edged lower as investors began positioning themselves for the quiet summer period.

Friday, December 4th 2020, 8:37PM

by BusinessDesk

The S&P/NZX 50 Index fell 17.53 points, or 0.1 percent, to 12,631.38. Within the index, 30 stocks rose, 15 fell and five were unchanged. Turnover was $153.2 million.

Fisher & Paykel Healthcare continued to lead the market lower, dropping 4 percent to $32.30, as the strong currency and promising vaccine outlook weighed down the medical device exporter.

Sam Trethewey, a portfolio manager at Milford Asset Management, said the share price pulling back from high levels was an acknowledgement of the strong kiwi more than the progress in controlling the virus.

The kiwi hit a multi-year high overnight, breaking through 71 US cents before pulling back to trade at 70.55 cents at 5pm in Wellington, down from 70.67 cents yesterday.

The trade-weighted index was at 73.91 at 5pm, from 74.24 yesterday. The kiwi traded at 94.98 Australian cents from 95.36 cents, 73.26 yen from 73.80 yen, 58.08 euro cents from 58.28 cents, 52.45 British pence from 52.78 pence, and 4.6132 Chinese yuan from 4.6340 yuan.

“Typically, now is when we start to see volumes decline as people have been keen to reposition their portfolios for the new year,” Trethewey said.

Investors were focused on shifting their assets into stocks that may perform well as vaccines begin global distribution, he said.

Some stocks exposed to global recovery made gains. Vista Group International jumped 2.9 percent to $1.79, Z Energy rose 2.6 percent to $3.20, and Tourism Holdings was up 2.3 percent at $2.63.

US-focused tech stock Pushpay Holdings posted the day’s second biggest fall, dropping 2.2 percent to $1.79. The stock has fallen back to roughly where it was before the unexplained surge earlier in the week, following its share split.

Cancer diagnostics firm Pacific Edge continued to rally, adding 3.9 percent to reach 80 cents, as investors responded to Jarden’s assessment the stock could hit $1.40 in the next 12 months.

A2 Milk Company bounced 3.5 percent to $14.18, after declining all week as investors who were already nervous about its earnings outlook were rattled by growing diplomatic tensions between Australia and China.

“Generally, investors are struggling to find conviction in that stock,” Trethewey said. An earnings downgrade has seen the stock slip from above $20 in August, as some investors have lost confidence in its performance.

Key supplier Synlait Milk rose 2.3 percent to $5.31 and Fonterra Shareholders’ Fund units climbed 0.9 percent to $4.39 after the cooperative said it expects its 2021 forecast farmgate milk price to pump $10.5 billion into New Zealand economy, $500 million more than it suggested in October.

“Fonterra has been focussed a lot more on getting the basics right and has been supported by strong global dairy prices,” Trethewey said.

The dairy giant however said any escalation of trade and diplomatic tensions between China and Australia would be a concern. It also noted global markets are seeing some congestion in global supply chains.

Outside the top 50 stocks, TIL Logistics fell 6.3 percent to $1.04 after the company warned of a possible fuel tanker driver strike during the week before Christmas.

ASX-listed real estate firm Quattro RE has announced it will change its name to Auckland Real Estate Trust and take up a foreign exempt listing on the New Zealand stock exchange next Wednesday.

Tags: Market Close