NZ shares up as investors ignore uncertainty

New Zealand's headline share index finished the week with a small gain as investors continued to position themselves ahead of earnings results next week.

Friday, August 13th 2021, 6:24PM

by BusinessDesk

The S&P/NZX 50 Index rose 82.25 points, or 0.7%, to 12,764.06. Turnover was $134 million.

Most of the biggest gainers were stocks reversing recent downward trends, while some strong-performing stocks declined.

Fisher & Paykel Healthcare rose 2.4% to $31.63, having dropped more than 4% in recent sessions. SkyCity Entertainment Group climbed 2.2% to $3.20, bouncing from a near six-month low.

Travel booking software company Serko was up 2.2% at $6.96, while A2 Milk Company gained 2.1% to $6.33. Both had positive broker reports released yesterday.

On Wednesday, the Reserve Bank of NZ is widely expected to raise the official cash rate at least 25 basis points.

The central bank’s survey of expectations, which showed people were expecting short-term inflation to be “north of 2%”, increases the likelihood of a larger 50-basis-point hike, said ASB economist Nathaniel Keall.

Shares in Air New Zealand edged up 1% to $1.485, even as it deferred its inevitable billion-dollar capital raise until next year at the request of its majority shareholder, the NZ government.

However, the government has also offered some relief by cancelling a planned 1% increase to the interest rate being charged on the airline’s debt facility. That will lower the cost of servicing Air NZ's debt for the extra months until it can be repaid after the capital raise next year.

Forsyth Barr analysts today said the pathway to fully reopening borders remains long and uncertain.

“The backdrop for aviation-exposed transport and tourism companies remains uncertain with earnings downside risk a key feature as a result of a prolonged closure of the trans-Tasman bubble, and slow border reopening,” they wrote in a note today.

This puts Auckland International Airport at a heightened risk of failing its next debt covenant test in June next year, they said, and could worsen Tourism Holdings’ 2022 financial year loss.

Regardless, shares in both the airports and the camper van rental firm rose 0.8% to $7.285 and $2.42, respectively.

ikeGPS announced it had extended a contract with a communications company that is developing fibre infrastructure in the United States. The “follow-on contract” will generate $630,000 across the financial years 2022 and 2023.

Shares in the utilities line maintenance software company declined 0.9% to $1.08 today, having completed a $19.2m capital raise at $1 per share earlier this week.

Ebos Group had the day’s biggest decline, falling 2.1% to $31.50 after a strong run recently.

The kiwi dollar ebbed slightly and was trading at 70.07 US cents at 5pm in Wellington, down from 70.34 cents yesterday.

“With little data on hand to drive direction today, we anticipate the NZ dollar will remain largely range-bound in the lead up to next week’s RBNZ policy announcement,” currency exchange OFX said in a note.

The trade-weighted index was at 74.57 at 5pm, from 74.78 yesterday. The kiwi traded at 95.48 Australian cents from 95.50, 77.37 yen from 77.62 yen, 59.69 euro cents from 59.92 cents, 50.74 British pence from 50.71 pence, and 4.5382 Chinese yuan from 4.5549 yuan.

Tags: Market Close