Comvita a sweet spot in otherwise dull NZ sharemarket

The New Zealand sharemarket traded flat on the first day of the school holidays, but Comvita jumped more than 4% after making use of the prime minister’s visit to China by signing a new supply agreement.

Monday, July 3rd 2023, 6:24PM

by BusinessDesk

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The S&P/NZX 50 Index lacked any real direction and traded in a range of 11,874.74 and 11,918.67 before closing at 11,916.87, down just 0.4 points and with no movement percentage-wise.

Trading was light and quiet, with 28.18 million shares worth $88.23m changing hands, and there were 60 gainers and 69 decliners on the main board.

Matt Goodson, managing director of Salt Funds Management, said the local market traded up strongly with some aggressive price moves at the end of the quarter on Friday and it drifted aimlessly since then.

“There was another strong lead from the United States over the weekend but again it was driven by the mega-cap technology stocks and we don’t have the same correlation in NZ,” Goodson said.

The technology-driven Nasdaq was up 1.45% to 13,787.92 and has risen 31.73% for the year. Apple, now the world’s first US$3 trillion company, reached a new all-time high, rising 2.31% to US$193.97 (NZ$315.34).

Across the Tasman, the S&P/ASX 200 Index was up 0.64% to 7249.1 points at 6pm NZ time.

There is strong market interest in the next moves by the Australian and NZ Reserve Banks. The market is 50/50 on whether the Australian bank will this week hike its official interest rate another 25 basis points to 4.35% to tame stubbornly high inflation. Goodson said rental inflation is very strong in Australia.

The NZ bank meets next week and economists expect the official cash rate to remain on hold at 5.5%.

Goodson said there has been no information to suggest that will change. “Goods inflation has come down but services and wage inflation hasn’t.”

ASB Bank said events have been generally in line with the Reserve Bank’s view that it has done enough to get inflation back into the target band (1-3%) next year. “If anything, the slight gross domestic contraction in the first quarter reinforced that view.”

Show me the honey

Manuka honey producer Comvita increased 13c or 4.47% to $3.04 after telling the market it has signed a long-term supply deal with Ole supermarkets, one of China’s biggest premium retail chains. Details of the agreement, made during prime minister Chris Hipkins’ visit, are presently being finalised.

Goodson said Comvita signed a memorandum of understanding with an existing client and “we don’t know how much product they will buy. But it’s encouraging news and there’s been a fulsome market reaction. Comvita has been performing well and its share price has retraced from an oversold position.”

Ebos Group increased 75c or 2.04% to $37.50; Spark was up 5c to $5.14; Ryman Healthcare improved 9c to $6.67; and Seeka gained 7c or 2.68% to $2.68.

T&G Global was up 6c or 3.02% to $2.05; Green Cross Health rose 4c or 3.05% to $1.35; PGG Wrightson added 6c to $4.15; and Colonial Motor Company gained 13c to $8.73.

In the energy sector, Manawa increased 8c to $5.03; Vector was up 3c to $4.04; and Mercury was down 5c to $6.45.

Chorus declined 10c to $8.325. Goodson said there is a real division of views in the market over Chorus.

“Overseas investors believe the stock should be trading at a premium to its regulatory asset price, but domestics take the view that Chorus may not be competitive in fixed wireless if it charged the full amount.”

Mainfreight fell $2 or 2.78% to $70; Freightways declined 8c to $8.24; A2 Milk shed 8c to $5.278; Restaurant Brands decreased 10c to $6.15; and Skellerup Holdings was down 13c or 2.83% to $4.46.

Napier Port shed 8c or 3.2% to $2.42; Channel Infrastructure declined 2c to $1.45; and Hallenstein Glasson was down 7c to $6.07.

Tower, down 0.005c to 63c, has conditionally sold its Solomon Islands insurance business to Trans Pacific Assurance for nearly $3.3m.

Cancer diagnostics company Pacific Edge, up 0.001c to 8.8c, said it has updated its billing policy in the United States to enhance patient responsibility where the patient’s insurer declines to pay for a Cxbladder test. Pacific Edge is also updating its patient assistance programme to assist lower-income patients with making their bills more affordable. Medicare funding for Cxbladder tests ends on July 17.

Pacific Edge’s share price dropped more than 75% on the day that was announced last month.

Vital, up 1c or 4.88% to 21.5c, has extended its radio network contract with St John Ambulance through to March 2027, with a further two-year right of renewal.

Cooks Coffee, down 0.005c or 2% to 24.5c, said in a newsletter that it has opened five more stores in Britain and Ireland with a further five planned in June, and the company projects a positive cash inflow of $600,000 in the 2024 financial year.

Tags: Market Close