Shares snap six-day slide

New Zealand shares snapped a six-day decline after Chinese economic growth data beat expectations, buoying the outlook for Kiwi exporters.

Tuesday, January 19th 2021, 6:54PM

by BusinessDesk

The S&P/NZX 50 Index rose 42.95 points, or 0.3 percent, to 12,881.31. Within the index, 29 stocks rose, 14 fell and seven were unchanged. Turnover was $185.3 million.

China’s fourth-quarter GDP data was better than already solid expectations, increasing 6.5 percent from a year earlier, making it the only major world economy to grow last year amidst the global pandemic.

A recent wave of covid cases and lockdown restrictions in Hebei province may have limited celebrations but Greg Smith, head of research at Fat Prophets, said the GDP result was welcome news for the NZ economy which exports more than 20 percent of its total goods and services to China.

“China is our largest customer and is providing a blueprint for global recovery.”

Smith said as exports to China make up such a large proportion of the NZ economy any increased demand had a trickle-down effect in other sectors.

The news helped to stem six days of consecutive losses on the NZ share market as renewable electricity generators fell from record highs.

Today, Contact Energy dropped 3.2 percent to $8.89 and Meridian Energy was unchanged at $7.44 - having fallen more than 10 percent in the past week.

Export-oriented stocks moved higher. Port of Tauranga was up 2.5 percent at $7.68, A2 Milk Company rose 2.4 percent to $11.01, and Synlait Milk was up 1.1 percent at $4.75.

Travel software firm Serko posted the day’s biggest gain, up 3.4 percent to $5.74, but on extremely light volume with just 8,000 shares traded.

Outside of the top 50 stocks, car dealer Turners Automotive Group jumped 4.7 percent after it upgraded its profit expectations by $4 million, largely on the strength of writing more finance business.

Smith said Turners’ upgrade was a good omen for the wider economy as car sales "very much reflect the mood of the nation”.

Markets were generally a little subdued with Wall Street closed to mark Martin Luther King Day. The swap rate on 10-year government bonds dropped a couple of basis points, perhaps providing marginally more support for equities.

The kiwi dollar lifted a little and was trading at 71.33 US cents at 5pm in Wellington, up from 71.22 cents yesterday.

The trade-weighted index was unchanged at 74.00. The kiwi traded at 92.48 Australian cents from 92.65 cents, 74.16 yen from 73.89 yen, 58.96 euro cents from 59.01 cents, 52.42 British pence from 52.50 pence, and 4.6259 Chinese yuan from 4.6194 yuan.

Tags: Market Close