Renewable electricity news drives NZX 50 move

New Zealand's main share index edged higher with electricity firms having big swings in both directions after Infratil announced it may sell its billion-dollar stake in Tilt Renewables.

Tuesday, December 8th 2020, 6:12PM

by BusinessDesk

The S&P/NZX 50 Index rose 24.64 points, or 0.2 percent, to 12,656.02. Within the index, 23 stocks rose, 24 fell and three were unchanged. Turnover was $185.5 million.

On Friday, a US employment data release was twice as weak as had been forecast. While that would traditionally be cause for concern, US equities instead climbed to new records as it was interpreted as increasing the chance lawmakers would pass a fiscal stimulus bill.

In this covid era, it seems good news is good news and bad news is good news as well.

NZ shares followed the lead from Wall Street, leaping almost 1 percent when trading began, waning through the day to close up just 0.2 percent.

The market was split down the middle with a similar number of stocks up and down, with electricity stocks seeing the biggest moves in both directions.

Infrastructure investment firm Infratil hit the headlines today with news it was considering selling its billion-dollar stake in Tilt Renewables after being approached by several potential buyers.

The investment firm climbed 2.4 percent to $5.94, while Tilt - which is listed on the NZX but outside of the top 50 index - leapt 16.1 percent to $4.55, giving the wind farm developer a market capitalisation of $1.7 billion dollars.

Investment adviser at Hobson Wealth Partners, Brad Gordon, said it was a quick turnaround from Infratil, which had increased its stake in 2018.

“That’s in part with their ability to keep recycling capital and moving on to new ideas,” he said

Other electricity firms also saw significant shifts, although Gordon said this was more likely due to money flowing into clean energy exchange traded funds.

Pure renewable electricity generators rose, with Meridian Energy up 3.7 percent at $6.74 and Mercury NZ - which owns a smaller stake in Tilt - up 1.1 percent at $6.47.

Meanwhile firms that still have exposure to fossil fuels were weaker, Contact Energy dropped 1.9 percent to $7.87 and Genesis Energy declined 1.5 percent to $3.35.

The day’s biggest gain was from cancer diagnostics firm Pacific Edge which has been steadily tracking higher since Jarden gave the stock a $1.40 target price. It rose 3.8 percent to 83 cents today.

Auckland International Airport rose 3.5 percent to $7.99, while Air New Zealand rose 1.1 percent to $1.92. Travel booking software company Serko fell 2.2 percent to $5.43.

Precinct Properties posted the day’s biggest fall, down 2.3 percent at $1.70.

Fisher & Paykel Healthcare has continued to be volatile, dragging the index around with it. Today it fell 1.1 percent to $31.95 continuing an ongoing downward trend - it peaked above $37 in late October.

This quarter it has traded between $32 and $37, as investors appear to be uncertain as to how much the stock is worth. The strong kiwi dollar will hurt the exporter’s take-home earnings, the strength of which post-covid is still under debate.

The NZ dollar peaked above 71 cents last week before edging lower on Friday.

Today the currency was trading at 70.38 US cents at 5pm in Wellington, down from 70.55 cents last week.

Westpac Bank strategists said the currency would resume its climb, potentially breaking above 71 cents again soon, then adding 3 cents in the first half of next year.

“Improved market sentiment has also lifted the New Zealand dollar. In fact, the New Zealand dollar has a head of steam up and we expect that this momentum will see the NZ dollar/US dollar crossrate hitting 74 US cents by the middle of next year,” Westpac economists said in a note.

Kiwibank’s Peter Hunt said he expects the kiwi to be at 77 US cents by the end of 2021.

The trade-weighted index was at 73.74 at 5pm, from 73.91 on Friday. The kiwi traded at 94.69 Australian cents from 94.98 cents, 73.15 yen from 73.26 yen, 58 euro cents from 58.08 cents, 52.42 British pence from 52.45 pence, and 4.5991 Chinese yuan from 4.6132 yuan.

Tags: Market Close