Infratil boosts NZX 50 in first session of 2022

Infrastructure investment firm Infratil led the benchmark equity index higher in the first trading day of the year after one of its key assets had its valuation boosted 15%.

Wednesday, January 5th 2022, 7:57PM

by BusinessDesk

The S&P/NZX 50 Index rose 116 points, or 0.9%, to 13,150.38. Turnover was $126.8 million.

Last year, the index saw its first annual decline in almost a decade when it closed down 0.4% on December 31.

Mark Lister, head of private wealth research at Craigs Investment Partners, said the performance gap between global shares and NZ was the widest it had been since 1998.

“It has been a long time since we’ve lagged the rest of the world by such a margin,” he said.

However, Lister said he was encouraged NZ had already begun to tighten its monetary policy while other countries were yet to do so.

“I do feel comforted by the fact that our market has maybe already priced for that dynamic over the next 12 months,” he said.

Highly stimulatory central bank policies have played a huge role in growing global asset prices during the pandemic. Those settings will likely have to be reversed this year to prevent economic overheating and inflation.

In a sense, NZ has already begun to take its medicine while other countries are stalling.

Today, the market had a strong reopening with Infratil beginning the 2022 calendar year with a hefty increase in its valuation of its CDC Data Centres business.

An independent valuation of the data storage asset added 15% – or approximately A$400m (NZ$425m) – to its sticker price, bringing it to a mid-point of A$2.7 billion as of Dec 31.

Infratil said the increase was due to the upcoming development of new capacity and strong customer interest in CDC’s services.

The independent valuer also reduced the discount rate used, with NZ data centres nearing the end of construction and a positive shift in its overall assessment of sector risks.

Lister, from Craigs Investment Partners, said the upgrade was great news for Infratil and the share price had responded well.

“It doesn't surprise me, because data centers are performing exceptionally well everywhere; demand for data and places to store it is growing really strongly,” he told BusinessDesk.

Shares in the infrastructure investor climbed 3.8% to $8.30 today, not far below its all-time high of $8.46 in October last year.

Mercury NZ took second place on the index, up 3.3% at $6.32, followed by Ebos which rose 3.1% to $42.49 after raising capital for an acquisition late last year.

Newly-listed Trade Window jumped 19.2% to $2.80 as the shipping paperwork company continues to be sought out by speculative investors wanting to back an early-stage blockchain opportunity.

NZME rose 0.7% to $1.44 despite a key investor announcing they had a sold 2.3% stake in the media company for roughly $6.7m in the last days of 2021.

US-based Osmium Partners began buying the stock when it was trading at incredibly low prices following the pandemic, by February last year the firm owned 16% and continued to buy until it hit 19% in June.

The investment firm today reported it sold 4.6 million shares on the day before New Years’ Eve, after the stock hit a record high of $1.46 on December 15.

There was little other news, with much of the country away on summer holidays and market participants “thin on the ground”, Lister said.

It was this time last year that renewable energy stocks got bid up to extraordinarily high prices due to low liquidity.

Activity will kick into gear towards the end of this month when the next batch of inflation data is released after the September quarter data well exceeded the Reserve Bank’s target.

The kiwi dollar was trading at 68.13 US cents at 3pm in Wellington, up from 68.32 cents yesterday.

Tags: Market Close