NZ sharemarket drifts on US and China uncertainty

The New Zealand sharemarket drifted further on uncertainty about United States inflation and the China economy, while the world’s largest investment fund BlackRock added some intrigue.

Thursday, August 10th 2023, 6:33PM

by BusinessDesk

The S&P/NZX 50 Index softened in the afternoon and closed at 11,811.77, down 26.49 or 0.22% after reaching an intraday high of 11,858.52. The index has fallen 1.11% so far this week.

There were 54 gainers and 69 decliners on the main board, with 28.97 million share transactions worth $64.6m. Ebos Group, down 20c to $35.50, topped the individual trading list with $49.55m worth of its shares changing hands.

Greg Smith, head of retail with Devon Funds Management, said the local market was in a waiting game with the NZ reporting season kicking off in earnest next week and “a very important” US inflation number overnight.

In an unusual move, the NZX Product Operations put out a note that BlackRock asked to retract the substantial product holdings notices for 11 NZ stocks.

BlackRock is the world's largest asset manager, with US$8.59 trillion (NZ$14.17t) in assets under management at the end of last year.

The retraction related to BlackRock’s shareholdings in Goodman and Vital Healthcare Property Trusts, Oceania Healthcare, Summerset Group, Stride Property, a2 Milk, Property for Industry, Pacific Edge, Auckland International Airport, Contact Energy and Ryman Healthcare.

One commentator suggested BlackRock may be completing a custodial deal in NZ for its shareholdings.

Wall Street was again weaker, with the Dow Jones Industrial Average down 0.54% to 35,123.36 points, S&P 500 declining 0.7% to 4467.71, and Nasdaq Composite falling 1.17% to 13,722.02.

The Nasdaq has fallen 4.4% this month but is up 31% for the year, the S&P 500 is down 2.6% and Dow Jones 1.2%. The US July consumer price index (CPI) is expected to show annual inflation increasing to 3.3% from 3% in June, with crude oil rising and hitting a nine-month high.

The Federal Reserve has said any further interest rate rise depends on economic data.

Smith said China is moving into deflation, with consumer and producer prices falling last month for the first time since November 2020. The July CPI slipped to minus 0.3% from zero in June, and producer prices fell for the 10th consecutive month, contracting 4.4% from a year ago.

He said there are concerns about the Chinese economy, and people are hoping for further government economic stimulus measures.

Reporting season

In the first company result of the latest reporting season, Vital Healthcare Property Trust – unchanged at $2.345 – achieved an 18% in operating revenue to $145.22m for the year ending June. It had a net loss of $152.4m mainly because of a $205.1m reduction in the valuation of its $3.4 billion property portfolio of private hospitals and health centres.

Vital told the market it continues to have a market-leading portfolio of high-quality healthcare assets across Australia and NZ with 99% occupancy and a weighted average lease term of 17 years to the leading operators for each country.

Despite recent heightened market volatility, healthcare property remains a defensive asset class, underpinned by a high level of government support and non-discretionary spending, Vital Healthcare said.

Fisher and Paykel Healthcare was down 18c to $23.33; A2 Milk shed 10c or 1.78% to $5.52; Summerset declined 17c to $9.;90; Ryman decreased 11c to $6.53; and SkyCity fell 6c or 2.59% to $2.26.

Stride Property declined 5c or 3.36% to $1.44; Delegat Group was down 15c to $9; Tourism Holdings decreased 6c to $3.35; Task Group shed 2c or 3.57% to 54c; and 2 Cheap Cars fell 3c or 5.66% to 50c.

Among retailers, Briscoe Group was down 4c to $4.70; KMD Brands declined 2c or 2.22% to 89c; and The Warehouse increased 6c or 3.53% to $1.76.

Fletcher Building rose 16c or 2.97% to $5.5; Chorus gained 8.5c to $8.565; Seeka was up 6c or 2.37% to $2.59; Move Logistics added 2c or 2.5% to 82c; and PGG Wrightson collected 8c or 1.9% to $4.28.

Contact Energy, up 4c to $8.40, is making a tender for 50 megawatts of electricity for a minimum of five years.

Contact told the market that the proactive release of an open tender aligns with Contact’s decarbonisation commitment and the surge in requests from businesses who want long-term electricity contracts to support their own decarbonisation targets.

Scales Corp declined 3c to $3.08 after announcing it was expanding its global proteins division into the European market by subscribing for a 50% shareholding in a new pet food processing operation, Esro Petfood BV based in The Netherlands.

Scales is providing lending of 15m euros (NZ$27.15m) for two processing plants, the first to be built in Belgium. Scales invested in Australia alongside one of the Esro owners, the Fayman family.

Fonterra Shareholders’ Fund gained 8c or 2.19% to $3.74. The dairy cooperative is making its capital return of 50c a share (amounting to $800m) to shareholding farmers on Aug 18.

Tags: Market Close