NZ shares fall as Ryman drops 7%

New Zealand's main share index moved lower on Monday as Ryman Healthcare fell out of a key index, even as global markets had a bounce after recent weakness.

Monday, May 16th 2022, 7:02PM

by BusinessDesk

The S&P/NZX 50 Index fell 10.5 points, or 0.1%, to 11,157.66. Turnover was $104 million.

With more stocks up than down, the benchmark index may have risen today were it not for confirmation that Ryman Healthcare would be dropped from the MSCI Standard Index at the end of the month.

Shares in the aged care provider dropped 7.8% to $8.66, with 9.9m shares changing hands as investors reacted to the news.

Forsyth Barr estimated index tracking funds would sell $232m worth of shares because of its exclusion.

Active investors often try to pre-position themselves ahead of these events, sometimes selling shares in the hope of buying back at a cheaper price when the passive funds sell.

However, even before today’s share price drop, some equity analysts were starting to feel the stock was looking cheap. Macquarie Equities analyst, Nick Mar gave it an ‘outperform’ rating and a target price of $14.75 on Friday.

Other property-related stocks also declined today. Precinct Properties fell 3.3% to $1.34, Oceania Healthcare dropped 3% to 96 cents and Goodman Property Trust units were down 2.4% at $2.07.

On the other side of the board, Steel & Tube Holdings jumped 4.3% to $1.45 after the company said it was expecting normalised operating profit for the full year to be up more than 69%.

"Revenues have been robust across the business and we have also benefited from diligent price and margin management, structural cost savings and supply chain capability," said chief executive Mark Malpass.

Small cap tech stocks had gains, as global investor sentiment improved and US tech stocks recovered some of their steep losses.

Wellington Drive Technologies jumped 8% to 13.5 cents, Plexure Group rose 4.4% to 23.5 cents, and Blis Technologies was up 2.9% at 3.6 cents.

BNZ research said risk assets ended last week more hopefully, with equities rebounding strongly on Friday from their heavy falls earlier in the week.

“News that Shanghai was planning to start removing restrictions this week was taken positively by the market although the rebound was likely as much to do with a correction from oversold levels as a change in investors’ economic outlook,” BNZ strategist Nick Smyth said in a note.

Exporter to China, A2 Milk, recovered 2.5% to reach $4.56 per share, but the stock is still down 25% year-to-date, and its supplier Synlait Milk climbed 2.3% to $3.18.

DGL Group recovered 4.5% to $3.28 after it announced it had acquired a chemical warehousing company for $3.5m as the business continues to expand.

The NZ dollar rose slightly, from 62.38 US cents to 62.66 US cents, as commodity currencies gained ground on Friday.

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