A2 Milk lifts NZ shares

A2 Milk Company led the New Zealand share market higher as solid dairy demand and a reassurance of friendly trade relations with China helped lift the stock from a two-year low.

Wednesday, January 27th 2021, 6:29PM

by BusinessDesk

The S&P/NZX 50 Index rose 50.54 points, or 0.4 percent, to 13,374. Within the index, 31 stocks rose, 13 fell and six were unchanged. Turnover was $151.8 million.

Markets globally have been a little directionless as investors wait for more information on fiscal stimulus in the United States, which may not come until late March, and for the local corporate earnings season to kick off next month.

“Earnings season is just around the corner, so it is worthwhile to wait a couple of weeks to get an extra six months of data,” said Grant Davies, an investment advisor at Hamilton Hindin Greene.

The lingering pandemic also appears to be discouraging traders who had been hoping for a much faster rollout of vaccines. An official at the World Health Organisation said virus transmission would continue throughout the year.

Still, NZ’s benchmark equity index was pushed higher as milk marketing firm A2 Milk Company rallied 3.9 percent to $11.50, its third consecutive gain, albeit from a two-year low. The firm’s key supplier, Synlait Milk also climbed 2.6 percent to $4.83.

“Those companies have had a rough run over the past six months, so a little bit of a recovery rally from the two of them today,” Davies said.

Relations

Yesterday, New Zealand formally signed an upgrade to its free trade agreement with China, the number one buyer of Kiwi dairy products.

While the new additions to the deal were not material for milk powder exporters, trade analysts observed it was a signal the China-NZ relationship remained firm despite tension with other member states of Five Eyes western intelligence partnership.

Davies said the affirmation was a “tick in the right box and may help to allay some worries” for exporters.

Fletcher Building posted the day’s biggest decline, dropping 3.1 percent to $6.35, while the renewable electricity generators continued to be the biggest drag on the index.

Meridian Energy dropped 1.9 percent to $7.75 and Contact Energy was down 1.8 percent at $8.74. Genesis Energy, meanwhile, continued to track higher after reporting strong December-quarter retail performance.

Forsyth Barr research said Genesis was their “preferred electricity stock” and raised their target price to $4 per share. The stock rose 1.7 percent to $3.895 today.

Outside of the index, Livestock Improvement Corp jumped 3.7 percent to 84 cents on a 10 percent boost to first-half net profit on strong sales. The farmer-owned cooperative also raised its forecast for the full year.

The kiwi dollar was trading at 72.28 US cents at 5pm in Wellington, up from 71.89 cents yesterday.

The trade-weighted index was 74.78 at 5pm, from 74.50 yesterday. The kiwi traded at 93.39 Australian cents from 93.33 cents, 74.97 yen from 74.55 yen, 59.45 euro cents from 59.21 cents, 52.64 British pence from 52.61 pence, and 4.6702 Chinese yuan from 4.6520 yuan.

Tags: Market Close