Investors in a better mood and drive sharemarket higher

Most New Zealand shares bounced back from Tuesday’s moment of weakness as financial market sentiment swung back towards optimism overnight.

Wednesday, December 16th 2020, 7:38PM

by BusinessDesk

The S&P/NZX 50 Index rose 61.82 points, or half a percent, to 12,828.99. Within the index, 26 stocks rose, 17 fell and seven were unchanged. Turnover was $300.3 million.

Indices on Wall Street broke a four-day losing streak on Tuesday night, each climbing more than 1 percent as investors became more optimistic about the chance of a Brexit trade deal and a new US fiscal support package.

Director of Salt Funds Management, Matt Goodson, said the New Zealand market was following this cheerful overnight lead.

The benchmark index had been trading at a record earlier in the day, but pared back those gains as it headed into the close.

Two thirds of the above-average volume was put through the market in the last hour of trading, suggesting institutional investors rebalancing their portfolios might have driven the move.

Movers and shakers

Spark New Zealand led the market higher, climbing 3 percent to $4.54, and was the most traded stock bar one.

Pushpay had 61 million shares change hands and its share price fell 2.7 percent to $1.84, as it completed a bookbuild to facilitate a current and a former director selling a 5 percent stake in the company.

Co-founder Chris Heaslip and executive director Chris Fowler together sold 54.68 million shares at $1.79 per share, a total of $97.9 million.

“On one level it is quite understandable that early-stage investors and key management would be selling down their stakes, but Pushpay has certainly seen broad-based selling from insiders in recent months,” Goodson said.

Retirement village operator Summerset Holdings rose 2.9 percent to $11.20 after it said annual profit would be between $96 million and $98 million, when it repays the $8.6 million government wage subsidy it received following lockdown.

“As one would hope, given the strength in the housing market, they are finding it rather easy to sell their units at a good price,” Goodson said.

The reason Summerset was able to claim the wage subsidy was because the resale of units stopped during lockdown. Goodson said the resale of units, which have a lifetime occupancy, is not taxable.

“So, it actually rankled somewhat, that the sector did get the wage subsidy when the sector of their business that was affected was un-taxable in the first place,” he said.

Ryman Healthcare today announced it would also repay the $14.2 million it received. However, its share price fell 1.9 percent to $14.71 despite the positive update from Summerset.

Infratil fell 1.1 percent to $7.02 as its share price continued to drift lower in the absence of news on the takeover bid from AustralianSuper.

“It would be surprising if they just went away without taking things further,” Goodson said.

“There is a reasonably wide range of views on valuation, but I think they have to come back with a bid with an $8 in front of it, to even be considered.”

Kiwi dollar struggles to hold 71 cents

The New Zealand dollar is widely expected to continue to climb, but has failed in multiple attempts to hold above 71 US cents for more than a few hours.

The kiwi dollar was trading at 71.04 cents at 5pm in Wellington, up from 70.75 cents yesterday, but dropped back to 70.98 cents almost immediately afterwards.

The trade-weighted index was at 74.11 at 5pm, from 74.01 yesterday. The kiwi traded at 94.04 Australian cents from 94.15 cents, 73.55 yen from 73.67 yen, 58.40 euro cents from 58.22 cents, 52.84 British pence from 53.04 pence, and 4.6465 Chinese yuan from 4.6364 yuan.

Tags: Market Close