Air NZ shares and rights slip

New Zealand's benchmark share index dipped lower on Wednesday as investors sold Air New Zealand shares and rights in high volumes.

Wednesday, April 6th 2022, 6:09PM

by BusinessDesk

The S&P/NZX 50 Index fell 42.08 points, or 0.4%, to 12,079.30. Turnover was $188 million.

Air NZ was the most traded stock by volume with more than 12m shares changing hands, with Air NZ rights coming just behind with 10.3m shares traded.

Most retail investors received their rights this morning and were able to trade or exercise them for the first time today.

The rights – which trade under the ticker AIRRG – traded at a significant discount to the ordinary shares throughout the day.

Ordinary shares closed almost 10% lower at 86 cents per share, while rights closed at 52c each.

Each right entitles the holder to buy two Air NZ shares at 53c each, which gives the rights a theoretical value of 66 cents apiece, relative to the airline’s closing price of 86c.

This suggests investors were buying and selling rights at a near 7c – or 8.1% – discount to the market price of Air NZ shares.

Some investors were likely selling their existing shares and using that money to exercise their rights to buy at 53 cents. However, trading volumes suggest many were also choosing to sell their rights for cash, despite the market price for rights being low.

Other stocks that had significant falls included Meridian Energy, which was down 2.3% at $5.08, and Sky Network Television which fell 1.7% to $2.88.

Move Logistics Group jumped 11.5% to $1.45 today, despite having no news released.

The stock fell significantly after Russia’s invasion of Ukraine pushed fuel prices up, but today’s bounce brings Move back to its pre-war price.

Jarden analysts today cut their target price on Mainfreight from $91 to $87, mainly due to higher interest rates.

However, they said the company’s domestic business was positively exposed to ongoing trends in freight shipping with supply chain issues increasing demand for less-than-container load freight solutions.

The analysts did not mention Move Logistics, but this increased demand could also benefit other freight providers. Move has two former Mainfreight executives on its board.

Shares in Serko also had a big bounce, up 3.8% at $4.96.

The NZ dollar was trading at 69.40 US cents at 3pm in Wellington, down from 69.46 cents yesterday.

Imre Speizer, Westpac Bank’s head of NZ strategy, said commodities have been higher since the Ukraine war started which has supported the NZ dollar.

“Commodity prices should remain a major source of support this year. Potential to reach 70 US cents during the month ahead, and 71c by June,” he said.

Tags: Market Close