Merry Christmas for the local stock market

New Zealand's main share index rose for a third day in a short Christmas Eve trading session, with A2 Milk continuing its recovery as it finalised terms to buy Mataura Valley Milk.

Thursday, December 24th 2020, 8:03PM

by BusinessDesk

The S&P/NZX 50 Index advanced 17.73 points, or 0.1 percent, to 13,037.94. Within the index, 24 stocks rose, 17 fell and nine were unchanged. Turnover was $113.6 million in a half-day of trading.

A2 Milk rose 1.4 percent to $12.06, extending its recent recovery, after the milk marketing firm agreed terms to buy three-quarters of Mataura Valley Milk for $268.5 million. The purchase includes a commitment to invest $120 million in the facility over the next two or three years.

Grant Davies, an investment adviser at Hamilton Hindin Greene, said A2’s sharp drop earlier this month after its profit warning attracted some buyers who saw it as a bargain.

“A2’s had a little bit of a recovery, which would’ve helped” lift the broader index, he said.

Synlait Milk, A2’s biggest supplier, rose 1.4 percent to $5.01, and Fonterra Shareholders’ Fund units were up 0.2 percent at $3.57.

The power companies also remained well bid, with several already trading at records.

Meridian Energy was unchanged at a record $7.20. The country’s biggest electricity generator was fingered in an undesirable trading situation ruling earlier this week, with the Electricity Authority finding a unique set of events reduced competition in the wholesale power market in December last year created higher than would be expected prices.

“People are liking the rather timid regulatory outlook there – we’ll have to wait and see what they come out with but the market’s reasonably comfortable with it,” Davies said.

Among other power companies, Contact Energy was also unchanged at $8.78, Mercury NZ was up 0.2 percent at $6.44 and Genesis Energy rose 0.3 percent to $3.57.

Arvida Group advanced 3.5 percent at $1.76. The retirement village operator noted Milford Funds Management as a substantial shareholder today, with the fund manager building a 5 percent stake. Ryman Healthcare, the country’s biggest listed retirement village operator, increased 1.6 percent to $15.24.

Napier Port led the market higher, up 4.2 percent at $3.49.

Still ahead

Pacific Edge gave up some more of this year’s stellar gain, falling 3.4 percent to $1.15.

Heartland Group Holdings, which has broad exposure to the Australian economy, fell 2.4 percent to $1.62. It also holds a stake in Harmoney Corp, which yesterday said it secured a $200 million credit line from M&G Investments. Dual-listed Harmoney rose 7.5 percent to $3.17 on the NZX.

Retailers were generally weaker heading into the Christmas break. Kathmandu, the only retailer in the top 50 index, rose 0.8 percent to $1.29. However, Hallenstein Glasson fell 1.2 percent to $6.58, The Warehouse was down 0.4 percent at $2.74 and Briscoe Group declined 2.2 percent to $5.25.

NZ and Australian stock markets weren’t derailed by outgoing US President Donald Trump threatening to veto legislation to provide more covid stimulus to the world’s biggest economy and keep the federal government open. He also vetoed a defence spending bill today.

The kiwi dollar held its overnight gains, trading at 71 US cents at 1pm in Wellington from 70.49 cents at 5pm yesterday. The trade-weighted index was at 74.03 from 73.66.

The kiwi traded at 73.50 yen from 72.94 yen yesterday, 93.58 Australian cents from 93.30 cents, 58.19 euro cents from 57.82 cents, 52.52 British pence from 52.59 pence, and 4.6427 Chinese yuan from 4.6184 yuan.

Tags: Market Close