NZX 50 makes seven day gain run

New Zealand’s benchmark equity index eked out its seventh consecutive gain led by potential growth stocks Pacific Edge and Sky TV.

Monday, September 6th 2021, 7:02PM

by BusinessDesk

The S&P/NZX 50 Index rose 8.9 points, or 0.1%, to 13,300.03. Turnover was $118.8 million.

Cancer diagnostics firm Pacific Edge led the market higher, advancing another 5.7% to close at $1.49 – just below analysts’ median target price of $1.50.

Hot on its heels was a resurgent Sky Network Television, extending a 23% gain by another 4.9% to reach 21.5 cents per share.

Brad Gordon, a director at Hobson Wealth Partners, said growth stocks appeared to be leading the market and may be supported by marginally lower bond yields today.

Pacific Edge, specifically, was continuing to rally on its addition of a secondary listing on the ASX which will allow institutional Australian investors to buy the stock.

“Australia seems to be able to understand these high growth stocks better than New Zealand can, albeit they can add some volatility,” Gordon told BusinessDesk.

The investment director said Sky TV’s dramatic rise from the 16 cents it traded at a week ago was due to investors grappling with the stock’s “terminal value” – which is the value of an asset beyond the time cash flow can be estimated.

“That’s why Auckland Airport has stayed strong because its terminal value hasn’t really changed a lot. With Sky TV no one knows what its value looks like in 5 years time,” Gordon said.

However, the stock was once a heavyweight on the NZX and if it can return to growing revenue the “potential upside looks quite interesting”, he said.

Synlait Milk had the day’s biggest loss, down 3.6% to $3.25, while A2 Milk dropped 0.8% to $5.93 after it was removed from the ASX 50.

Gordon said the exclusion was not itself material, as most funds track the ASX 200, but was a negative for investor sentiment.

Comvita shares rose 0.3% to $3.70 after the honey maker announced a strategic partnership with an entertainment and sports agency to form a celebrity-backed lifestyle brand to promote the healing properties of mānuka honey and propolis.

Stock market operator NZX declined 1.6% to $1.82, after reporting $2.5 billion had been traded through the cash market in August, up 4.4% from last year.

Gordon said earnings season had been very strong with investors mostly unconcerned by even the few weaker results.

“Companies the market expected to do well did very well, and those that weren’t expected to do well weren’t very adversely affected,” he said.

US markets were mixed on Friday after a disappointing lift in August job numbers raised concerns about the pace of economic recovery.

Employment rose by 235,000 in August much weaker than the consensus of analysts’ forecasts centred on a lift of about 750,000.

Market reaction was mixed as a slower recovery also means more central bank stimulus, and the kiwi dollar ended the week above 71.50 cents for the first time in almost three months.

Today the currency drifted lower to trade below 71.40, although it momentarily spiked to 71.45 when prime minister Jacinda Ardern announced two-thirds of New Zealand would be released from lockdown this week.

Tags: Market Close