Meridian leads NZ stocks higher

New Zealand shares generally rose on Wednesday following a rally on Wall Street overnight and boosted by a strong performance from NZ electricity stocks.

Wednesday, May 18th 2022, 7:05PM

by BusinessDesk

The S&P/NZX 50 Index rose 120 points, or 1.1%, to 11,258.28. Turnover was $150 million.

Meridian Energy led the market higher, jumping 4.7% to $4.65, after sharing a positive operating report for April.

Retail sale volumes were up 3.1% on the same month last year, with demand from businesses up more than 10%, while agricultural volumes dropped 18%.

Electricity grid manager Transpower also published a revised version of its indicative transmission pricing, which shows what generators like Meridian would have been charged under a new pricing methodology.

However, Transpower made an error in its calculations and revised Meridian’s annual cost saving to $14m, down from $26m in the previous update.

Grant Davies, an investment adviser at Hamilton Hindin Greene, said it was a smaller saving for Meridian, but it was in line with what investors expected and was being well received.

Contact Energy also rose 2.9% to $7.77, Genesis Energy was up 1.5% at $2.71, and Manawa Energy declined 0.7% to $7.

NZ government bond yields moved marginally higher today, but are sitting well back from their highs, something Davies said may be supporting the equity market rally.

“The interest in interest rates has been the main driver of markets’ wheels to come off, and that reduction has given the market a little bit more reason to be positive,” he said.

BNZ’s head of research Stephen Toplis said he expected the official cash rate to peak below 4% and then be followed by rate cuts in 2025.

Several interest-rate sensitive stocks were up today. Pacific Edge rose 3.8% to 83 cents, Pushpay Holdings was up 2.5% at $1.24, and Ryman Healthcare rose 2.3% to $9.25.

Argosy Property was up 3.3% at $1.24 and Investor Property rose 2.7% to $1.54, after the two property stocks gave solid reports that showed their portfolios still increasing in value.

Serko dropped 4.3% to $4.50 after it reported its annual earnings and gave disappointing commentary on next year's earnings.

Davies said the company said it expected to approximately double revenue in the 2023 financial year, but many investors had been expecting more.

A2 Milk actually rose 0.2% to $4.59, despite a third class-action lawsuit against the company being filed, this time in the High Court in Auckland.

Davies said the company was planning to defend itself against these suits, but it was yet another distraction for management.

The NZ dollar was trading at 63.57 US cents at 3pm in Wellington, up from 63.31 cents yesterday.

“The Kiwi is a touch higher this morning, having got a tailwind from the rally in stocks and soft commodities overnight,” said ANZ’s Brian Martin.

“But it’s not all roses – US bond yields are higher, Bitcoin is down, and the broad tone of ‘Fedspeak’ overnight was hawkish; that saw expectations for US Federal rate hikes rebound, too”.

Tags: Market Close