Auckland International Airport shares stumble, all eyes on Fed

Auckland International Airport shares fell more than 3% today and almost pulled New Zealand’s sharemarket lower on the news that the airport was trimming its dividend policy.

Wednesday, June 14th 2023, 6:09PM

by BusinessDesk

But even though Auckland International Airport (AIA) and other index heavyweights, like Ebos Group and Fisher & Paykel Healthcare, ended the day lower, the S&P/NZX 50 Index rose 25.8 points, or 0.2%, to 11,678.620. Turnover on the entire market was $180.3 million.

AIA changed its dividend policy to paying between 70% and 90% of underlying profit, having previously targeted 100%. This is to help pay for the major capital programme to upgrade the country's main international hub.

AIA said in April, that the cost of its airport terminal project had doubled from a suggested "$1 billion-plus" to $2.2 billion.

The last time the airport paid a dividend was in September 2019.

Also pressing down on the airport’s stock today was the news that it would be responding to the Commerce Commission’s draft determination for its input methodologies review around the cost of capital and the commission's review of AIA’s pricing decision – which is expected early next year.

“The Commerce Commission determination is going to have a massive impact on what they can charge for their assets,” Hamilton Hindin Greene’s Grant Davies said.

“A little move in the dial there can have a big impact on the share price and of course the uncertainty of what the final determination is going to be.”

The stock ended Tuesday’s trading session down 3.6% to $8.29.

Fisher & Paykel Healthcare also fell 0.5% to $23.79 while Ebos Group was down 1.7% to $35.64.

Fieldays kicked off today – the Southern Hemisphere's largest agricultural event – with prime minister Chris Hipkins appearing at this morning’s opening.

Among other things, Hipkins said a solution was "very close" to the embattled primary sector-led emissions pricing partnership and that he didn’t support a blanket tax on fertiliser.

A2 Milk edged down 0.7% to $5.59, along with Allied Farmers which was down 5.6% to 67 cents.

Fonterra Shareholders’ Fund was up 0.3% to $3.55, fishing company Sanford rose 0.5% to $4.07.

Agribusiness Scales fell 1.9% to $3.14 and dairy manufacturer Synlait Milk edged up 0.6% to $1.69.

Dual-listed residential developer Winton Land managed to rise 2.3% to $1.80 even after telling the market it expects to report net profit after tax (NPAT) at the lower end of its $72.4m to $82.4m guidance that the firm issued in February earlier this year.

Davies said property development had been a “very difficult” place to be, although he added that the retirement sector had been suffering even more.

Ryman Healthcare did jump 2.1% to $6.38 by the end of the day.

Diversified infrastructure group Infratil also edged up 0.6% to $9.85 and Davies said the stock had recovered from where it had fallen yesterday in response to the company opening its $100m retail offering for existing investors.

“It’s holding its own pretty well,” he said.

Tourism Holdings was up 1.8% to $3.87. Statistics NZ said today that the strong return of foreign visitors had helped narrow the nation’s current account deficit, though it remained at high levels.

Its balance of payments data series said the current account, which captures trade in goods and services and net income flows, had a deficit of $33.03b in the 12 months ended March 31 – or 8.5% of gross domestic product (GDP).

This had narrowed from the record shortfall of $34.94b, or 9% of GDP, at the end of December, which was revised from the 8.9% of GDP deficit reported at the time.

Harbour Asset Management picked up another 1% stake in cancer diagnostic firm Pacific Edge. The investment company already had a 13.5% stake but now has a total shareholding of 14.5%.

Pacific Edge’s shares slumped 89.9% last week on the news that the firm was likely to lose Medicare coverage of its Cxbladder tests in the US from mid-July.

“In for a penny,” Davies commented on Harbour’s move.

Pacific Edge’s stock was flat at 9.8 cents per share by early Wednesday evening.

Eyes on the Fed

The US Federal Reserve comes out with its next interest rate move decision on Thursday morning NZ time.

Inflation data out of the US ahead of the decision, which showed inflation may be cooling faster than expected, has given markets more confidence that the Fed will choose to pause rate hikes.

“There's no certainty, but I think the market is pricing that in – and even beginning to price in no further hikes," Davies told BusinessDesk.

On the currency front, the NZ dollar was trading at 61.64 US cents at 3pm in Wellington, from 61.19 cents on Monday.

Tags: Market Close