Sharemarket has another late surge into positive territory

The New Zealand sharemarket is perfecting the art of 'the late surge', and the country’s biggest kiwifruit grower Seeka has warned its latest harvest could be down as much as 20%.

Wednesday, April 19th 2023, 6:14PM

by BusinessDesk

After trading flat for most of the day, the S&P/NZX 50 Index rose sharply in the last half-hour matching session and closed at 11,917.82, up 33.72 points or 0.28% – after reaching an intraday low of 11,845.01.

There were 58 gainers and 75 decliners over the whole market and volumes picked up with 51.09 million shares worth $161.9m changing hands.

The market is looking ahead to the release of the March quarterly consumer price (CPI) index, with annual inflation expected to be near its peak.

Matt Goodson, managing director of Salt Funds Management, said the CPI is very important, especially the mix between tradeable (imported goods) and non-tradeable (domestic), and the numbers could be market-moving.

The Reserve Bank has forecast a 1.8% quarterly gain, compared with 1.4% in the December quarter, 1.7% for tradeable (1.4%) and 1.9% for non-tradeable (1.5%).

The annual inflation rate is expected to remain steady at around 7.2%. “That is still far too high, with wage demands all over the place,” said Goodson.

“Even though inflation is very close to a peak, the rate of decline is insufficient to suggest we will get to 1-3% any day soon.”

He said the market will soon be in its confession session and investors will be able to gauge how companies are tracking for the rest of the year. “Given the economic backdrop, I think there will be more (guidance) downgrades than upgrades.”

Bleak crop outlook

Te Puke-based Seeka, down 2c to $2.86, told the market that kiwifruit volumes were well down on the estimate, reflecting climatic events such as mild winter followed by a severe late frost, a cyclone and hail.

“Overall, the company estimates that total volumes could be down by 20% on the previous year and may result in a forecast operating loss for the current year,” Seeka said.

It was too early to accurately estimate full-year guidance, and the company has slowed its capital expenditure programme and continued with asset reviews, Seeka said.

The energy sector was weaker, with Contact down 6c to $7.59; Genesis declining 6.5c or 2.35% to $2.705; and Manawa decreasing 9c or 1.81% to $4.87.

Meridian Energy was down 6.5c to $5.175 after reporting a 2.7% decline in retail sales volumes for March, compared with the same month last year. For the March quarter, sales were 1.3% higher, with a 13.1% higher average price.

Meridian has revised its full-year capital expenditure to $370m-$395m, made up of $320m-$340m for growth and $50m-$55m for business spend. National hydro storage in the month to April 13 increased to 119%, from 105% of the historical average. South Island was 110% of average and North Island 196%.

Mercury, down 2.5c to $6.16, told the market in its quarterly operating report that national demand reduced by 1.1% compared with the previous corresponding period – the lowest third-quarter level since 2009.

Hydro generation increased 43% or 367GWh to 1220GWh, reflecting high inflows and geothermal generation was down 57GWh to 596GWh, mainly due to unplanned outages at Kawerau and Rotokawa. Mercury increased connections by 11,000 over the quarter.

Fisher and Paykel Healthcare was up 42c to $26.95; Ebos Group increased 35c to $45.14; Mainfreight collected $1.15 to $71.90; Napier Port rebounded 6c or 2.36% to $2.60; Winton Land gained 5c or 2.5% to $2.05; and Bremworth added 1.5c or 4.41% to 35.5c.

Chorus continued its strong run, increasing 7c to an all-time high of $8.77 and surpassing the previous peak of $8.74 achieved on February 16.

Goodson said Chorus continued to undertake an unusually aggressive and unorthodox buy-back programme when its share price has done significantly better than the rest of the market.

“Just this week Chorus bought back 271,000 shares out of the 492,000 traded – 55% of the volumes. It’s very hard to understand why they are doing this. Normally buy-backs are gradual over 12 months but this appears to be an emergency.”

Chorus’ $150m buyback, with a maximum of 22,.54m shares, began on Feb 25.

Vista Group was down 4c or 2.96% to $1.31; Arvida Group declined 3c or 2.83% to $1.03; Green Cross Health shed 4c or 2.99% to $1.30; and NZ Rural Land was down 2c or 2.17% to 90c.

NZX, down 2c to $1.16, provided full-year operating earnings (Ebitda) of $36m-$40.5m to shareholders at the annual meeting.

NZX has $10.3 billion in funds under management, and chair James Miller said Smartshares will lead the passive (investment) market in NZ for years to come.

Tags: Market Close