NZ’s market holds up against global headwinds

New Zealand’s market edged lower today but held up well compared to international markets, especially in response to the Bank of Japan’s surprise intervention to help its sinking currency.

Friday, September 23rd 2022, 6:07PM

by BusinessDesk

The S&P/NZX 50 Index fell 83.5 points, or 0.72%, to 11,434.82. Turnover was $95.6 million.

Salt portfolio manager Matthew Goodson described NZ’s market as a “cork bobbing in the ocean” as it responded to recent major global news.

“The really important stuff at the moment has been driven by offshore events,” he told BusinessDesk.

“We’ve seen central banks, with the exception of the Bank of Japan, having to hike very aggressively.”

ComCom clearance

Tourism Holdings had a big day today, with the tourist operator announcing this morning that it had reached an agreement with Apollo to sell $45m of its assets including 110 four- to six-berth motorhomes from Apollo's rental fleet in NZ and 200 four- to six-berth motorhomes in Australia.

Tourism Holdings (THL) put its shares into a trading halt after the announcement but resumed trading after the NZ Commerce Commission released a statement this afternoon granting clearance for THL to acquire 100% of the shares in Apollo in its proposed acquisition.

Goodson said he wasn’t very surprised that the NZ Commerce Commission had given clearance as entry into the industry wasn’t particularly difficult.

Tourism Holdings was up 3.8% to $2.75 – up 10 cents since yesterday – at close.

Big export stocks were down on the index today which is unusual as the low NZ dollar is normally good news for exporters.

But health manufacturer and index heavyweight Fisher & Paykel Healthcare fell 2.4% to $19.10.

'Weaker kiwi dollar'

On the dairy front, Fonterra Shareholders’ Fund Units were flat at $3.40 each. The dairy co-op released its full-year results yesterday, with net profit including non-controlling interests coming to $583m in the 12 months to July 31, down 3% on the year.

Synlait Milk was also flat at $3.56, and A2 Milk fell 4.2% to $5.99.

Goodson said the reason export stocks were edging down today was likely to be more to do with the ebbs and flows of the index today than anything else.

“Certainly, the weaker kiwi dollar is helpful for some of our companies,” he said.

“But the other thing to think about is that the low kiwi dollar is inflationary, which makes the Reserve Bank of New Zealand's task even harder.”

Customer data firm Plexure fell 9.1% to 35 cents – dropping 3.5 cents from a day earlier. Plexure held its annual meeting on Tuesday where the company’s chief financial officer told shareholders that he was confident that payments for $7.2m in outstanding invoices would be made.

Payroll software company PaySauce was also down 8.3% to 27.5 cents – but only $700 was traded – and so was NZ’s biggest EFTPOS provider SmartPay which fell 4.7% to 70.5 cents.

'Big winner'

Air NZ was down 1.4% to 73 cents. At the airline’s general meeting yesterday, the company soothed profit concerns that shareholders had over the weaker NZ dollar.

Vulcan Steel fell 1.2% to $8.20 today. The company told the NZX late this afternoon that it had completed the acquisition of Ullrich Aluminium with a third payment.

The steel manufacturer said following the finalisation of Ullrich’s financial accounts to July 31, Ullrich’s net tangible assets (NTA) had been confirmed as $127.75m – $3.25m lower than the projected NTA of $131m which was provided for in the agreement.

The settlement payment to Ullrich had been adjusted to reflect this, Vulcan said.

On the currency front, the NZ dollar was trading at 58.27 US cents at 5pm, down from 58.31 US cents yesterday.

ASB economist Nathaniel Keall said this morning that the Japanese Yen was the “big winner” of the G10 (the ten most heavily traded currencies in the world) after the Bank of Japan (BOJ) revealed it was going to intervene in the market to support its currency for the first time in 24 years.

Keall said the move saw the NZD and JPY cross fall to four-month lows around the 83.20 mark this morning but had edged up to 82.87 at 5pm today.

Jason Wong, BNZ’s senior market strategist said in a note this morning that the consensus view was that the BOJ’s “ultra-easy policy stance” was the main cause of particular yen weakness and the FX intervention could only have a short-term effect.

Tags: Market Close