NZ shares flat as recession risk puts investors off trading

New Zealand's sharemarket was flat on Monday with very light volume traded through the market as US markets closed tonight for the Juneteenth holiday.

Monday, June 20th 2022, 7:02PM

by BusinessDesk

The S&P/NZX 50 Index fell just one single point to 10,588.21. Turnover was $84 million.

US markets were mixed on Friday, with the S&P 500 making a small gain, while the Dow Jones declined slightly.

Recession risks remain top of mind for investors who are watching to see if central bankers are able to rein in inflation without causing an extended downturn.

The local share market is down 19.5% year-to-date, slightly outperforming the S&P 500, which has fallen about 22%.

“The best I see is that the recession, when it arrives, is short and sharp and, at least in much of the developed world, it's starting from a relatively high base,” said Oanda market analyst, Jeffrey Halley.

While NZ’s benchmark index was flat on the day, there were some significant percentage changes within it – which were likely accentuated by low trading volumes.

Vista Group International led the decliners, falling 2.6% to $1.60 and bringing its loss this year above 32%.

The index’s worst performing stock, Eroad, has fallen more than 66% this year and declined another 3.3% to $1.75 today.

Pushpay Holdings has been boosted by talk of a private equity takeover on the horizon but has been falling since the start of June, with no formal offer on the table. Its shares fell 3.1% to $1.24 today and are down more than 15% from its recent high in late May.

On the other side of the board, Pacific Edge was up 4.2% at 74 cents. Heartland Group Holdings rose 2.1% to $1.91, and Fisher & Paykel Healthcare was up 2% at $19.48.

Spark NZ, which is one of only two top 50 stocks to increase in value this year, rose another 1.2% to $4.665.

Some investors favour the telecommunications company as a safe haven from both inflation and recession risks.

Air New Zealand was the most traded stock but finished the day unchanged at 55.5 cents.

Outside of the index, media company NZME rose 4.4% to $1.19 after it announced it would pay a special dividend of almost $10m to make up for slow progress in its share buyback program.

The company has set aside $30m to buy its own shares on-market, but only managed to purchase about $5m before going into a trading restriction this month.

Shares in construction firm Fletcher Building fell 1.9% to $4.67 after the NZ Shareholders Association and KiwiSaver fund Simplicity called on its board chair to resign.

The two organisations want an independent review of Fletcher’s culture and risk, saying the company’s privileged position as the dominant player in its industry has led to an internally focused culture.

Shares in Move Logistics rose 1.9% to $1.06 after announcing it had secured $10m in funding from the NZ Transport Agency to set up a sea freight route between Nelson and New Plymouth.

The new service will call into 13 ports, without needing any new infrastructure to be built.

Move said it will get an appropriate vessel, with the first sailing expected next year.

The NZ dollar was trading at 63.27 US cents at 3pm in Wellington, down from 63.44 cents on Friday. The trade-weighted index was at 71.21, from 71.28 yesterday.

Tags: Market Close