NZ shares fall as Serko hits 10-month low

New Zealand shares fell marginally as an overnight bounce on Wall Street failed to buoy the local index, which was again led lower by riskier stocks.

Wednesday, January 12th 2022, 7:02PM

by BusinessDesk

The S&P/NZX 50 Index fell 27 points, or 0.2%, to 12,804.48. Turnover was thin at $98.8 million.

Global equity markets have come under pressure in recent days as investors worried about what will happen to share prices if the US Federal Reserve begins to raise rates in March.

Senior market analyst at Oanda, Jeffrey Halley, said US markets had been comforted by the Fed chair Jerome Powell’s statement to lawmakers which fell into a “goldilocks” zone.

“He didn’t back four rate hikes in 2022, nor a March start to hikes, nor did he give any details on when the Fed balance sheet run-off would start,” Halley said.

That was enough for US markets, which rallied overnight, but the NZX50 index faded in local afternoon trading.

One of the index’s higher risk growth stocks, travel booking software firm Serko, led the decline again – falling 5% to $5.90 – and is now down 15% since the market reopened on Jan 5.

It was followed by Tourism Holdings, down 4% at $2.86, reflecting travel industry uncertainty as the covid-19 pandemic drags on into the third year.

On the other hand, Air New Zealand was up 1% at $1.52 and Auckland International Airport was marginally up at $7.75.

Church donation platform Pushpay also bounced 4.1% from yesterday’s 18-month low, recovering to $1.27.

Harbour Asset Management said in a note today that slightly tighter monetary policy was unlikely to send real yields positive, meaning equities will still be bought by yield-seeking investors.

The fund manager said it was adding to its positions in NZ stocks on expectations that the market will resume its upward trajectory.

“We think the New Zealand share market will fare better in 2022 after being impacted by a multitude of largely one-off factors in 2021,” the note said.

One stock it had been buying is Summerset Group, which fell 0.7% to $13.46 today but was trading above $15 late last year.

Harbour today told the NZX it had built up a 5% stake in the retirement village operator after recently buying $1.2m of shares at approximately $13.36 each.

The kiwi dollar gained a little against the US dollar as risk sentiment worsened, but it remained entrenched in a narrow range.

It was trading at 67.88 US cents at 3pm in Wellington, up from 67.70 cents yesterday.

Currency exchange OFX said traders were focused on the “all-important consumer price index inflation print” coming out overnight in the US.

“Controlling price pressures is now a key mandate for the Fed and another robust print will all but guarantee a March rate hike,” it said.

Fed chair Powell has made it clear interest rates will increase if inflation persists but also said he expects some of the supply chain problems that are pushing up prices will ease in the middle of this year.

Tags: Market Close