NZ shares fall for sixth session

New Zealand shares declined for a sixth day as investors continued to pare back the holiday rally which drove renewable energy firms to record highs.

Monday, January 18th 2021, 6:35PM

by BusinessDesk

The S&P/NZX 50 Index fell 186.33 points, or 1.4 percent, to 12,838.36. Within the index, 34 stocks fell, 11 rose and five were unchanged. Turnover was $108.5 million.

Today’s decline pulled the benchmark index 5.3 percent below the all-time high reached on Jan. 8 and down 1.8 percent this year.

Renewable energy generator Meridian Energy remained the biggest drag on the market, still falling from inflated levels after a clean energy index directed a flood of money into the relatively illiquid stock during the holidays.

The stock fell a further 6.2 percent to $7.44 - down 25 percent from its record. Contact Energy, which is also in the clean energy index, fell 3.9 percent to $9.18 today.

Mark Lister, head of private wealth research at Craigs Investment Partners, said the index’s fall had been exaggerated by these stocks which had been “run up higher than they probably deserved to be”.

The S&P/NZX Mid-Cap Index, which excludes Meridian and Contact, is down less than one percent this year, while the index of the 10 biggest stocks is down 2.4 percent.

The weakness in the broader market - beyond the two electricity stocks - may be due to long-term interest rates climbing to pre-pandemic levels, Lister said.

“The rise in interest rates has maybe just taken the heat out of the rally, and that’s definitely a ‘watch this space’,” he said.

A range of other stocks were weaker. Pacific Edge, which was the top performer in 2020, dropped 6.2 percent to $1.06 as investors took some profit off the table.

Genesis Energy fell 2.7 percent to $3.60, after having followed the renewable electricity firms higher, and A2 Milk Company dropped 2.4 percent to $10.75 with a cloud of distrust still lingering over the stock.

“People are a little bit cautious ahead of reporting season with A2 as they seem to still have few challenges to work through,” Lister said.

Travel stocks also came up weaker after Australia’s health department boss said any widespread reopening of the borders during 2021 remained an “open question” to which “the answer is probably no”.

Tourism Holdings declined 3.4 percent to $2.28, travel software firm Serko fell 3.3 percent to $5.55 and Auckland International Airport was down 3.1 percent at $7.3350.

Restaurant Brands posted the day’s biggest rise, up 3.4 percent to $11.58 although on very light volume - only 12,000 shares were traded.

Of the eleven stocks that rose, only Heartland Group Holdings had more than 400,000 shares traded. The specialist lending firm rose 2.2 percent to $1.84.

The kiwi dollar was trading 71.23 US cents at 5pm in Wellington, down from 71.99 cents on Friday.

Weaker than expected US retail data made investors risk-averse and boosted the US dollar, although the kiwi is still expected to keep moving higher throughout the year.

The trade-weighted index was at 73.97 at 5pm, from 74.45 on Friday. The kiwi traded at 92.65 Australian cents from 92.72 cents, 73.89 yen from 74.70 yen, 59.02 euro cents from 59.25 cents, 52.51 British pence from 52.61 pence, and 4.6199 Chinese yuan from 4.6578 yuan.

Tags: Market Close