NZX50 slides to nine-month low

A weight-reducing drug is causing trouble for Fisher and Paykel Healthcare as the New Zealand sharemarket chalked up its sixth successive fall.

Friday, September 8th 2023, 6:20PM

by BusinessDesk

The S&P/NZX 50 Index was on a downward slide all day and closed at 11,344.11, down 82.73 points or 0.72% – its lowest level for nine months.

The index has now fallen 1.8% for the year and was at 11308.31 points on November 28.

There were 42 gainers and 84 decliners on the main board, with 28.19 million shares worth $102.5m changing hands.

Under pressure

Market heavyweight Fisher and Paykel Healthcare declined 63c or 2.85% to $21.45, its lowest close since November 28 when the share price was $20.71.

Shane Solly, portfolio manager with Harbour Asset Management, said Fisher and Paykel is under pressure from GLP-1, a pharmaceutical product that causes weight loss.

“Part of Fisher and Paykel’s applications is treating obstructive sleep apnea (OSA), which is associated with obesity. There is a question mark about whether people need to keep using OSA devices, and the market is wary about slowing sales of the devices.

“The GLP-1 drug has been wreaking havoc amongst healthcare stocks around the world. The OSA devices make up 30% of Fisher and Paykel’s earnings, and the company is making an investor presentation in the US next week, so we should learn more,” said Solly.

Fisher and Paykel’s nearest competitor, Australian-based ResMed, was down 1.21% to A$23.54 (NZ$25.52), having fallen from A$34 in early August.

Solly said the fall on the NZX was a delayed reaction to the weaker markets overseas. “The markets are on a rollercoaster, and today we rolled off. We have got through the winter, but we are not yet seeing spring in the capital market.”

He said some banks were talking about a further increase in the official cash rate by the Reserve Bank, and this weighed on interest rate-sensitive stocks.

“There is a scrap going on between the interest rate and equity markets, and interest rates are winning. The US 10 Year Treasury Note yield has gone above 4.2% again to a five-year high,” Solly said.

Local shares suffer

Auckland International Airport was down 15c or 1.86% to $7.91, and UBS Group AG has reduced the airport holding from 5.7% to $1.42% after selling 63m shares. Meridian Energy decreased 13c or 2.45% to $5.17.

Among interest rate-sensitive property stocks, Argosy was down 2.5c or 2.16% to $1.13; Goodman Property Trust decreased 4c or 1.82% to $2.16; and Kiwi declined 1.5c or 1.73% to 85c.

Precinct Properties, down 1c at $1.165, has completed its $150m convertible notes offer. The 2026 notes carry an interest rate of 7.56% a year, and the 2027 notes 7.53%.

Retirement village stocks Summerset Group declined 9c to $9.90, and Ryman Healthcare was down 6c to $6.46.

Port of Tauranga hit its lowest level in more than four years after declining 13c or 2.24% to $5.68. It sat at $5.72 on April 14, 2019.

Retailers Briscoe Group shed 14c or 2.92% to $4.66, KMD Brands declined 2c or 2.47% to 79c; Michael Hill was down 2c or 2.06% to 95c; and The Warehouse gained 4c or 2.34% to $1.75. KMD, along with Skellerup and Pacific Edge, is being removed from the FTSE Index next week.

Other decliners were Vulcan Steel, down 8cc to $8.66; NZ King Salmon Investments, falling 1.1c or 5.73% to 18.1c; Sanford shedding 10c or 2.51% to $3.89; Millennium & Copthorne Hotels NZ giving up 6c or 3.16% to $1.84; and My Food Bag slipping 1c or 5.71% to 16.5c.

Freightways, down 11c to $8.30, will begin trading in its dual listing on the ASX market this Thursday.

Seeka declined 11c or 4.56% to $2.30; Steel & Tube was down 4c or 3.39% to $1.14; Restaurant Brands decreased 12c or 2.71% to $4.30; and Ventia Services shed 10c or 3.33% to $2.90.

Used car dealer 2 Cheap Cars rose 11c or 22% to 61c after telling the market that strong trading in the first five months will likely push net profit for the 2024 financial year to the top end of the previous guidance.

The company has now upgraded its full-year net profit to $5.2m-$5.7m, up from $4.2m-$5m. For the period ending August, 2 Cheap Cars expects revenue of $34.1m, gross margin of $8.1m (up 32% on the same period last year), and net profit of $2.4m compared with $0.7m.

Other gainers were Mainfreight collecting 61c to $66.97; Infratil up 9c to $10.44; Vista Group rising 8c or 5.41% to $1.56; Winton Land adding 5c or 2.22% to $2.30; NZX increasing 2c or 1.77% to $1.15; and Serko up 9c or 2.36 to $3.90.

Technology investment firm Enprise, unchanged at 62.5c, is making a one-for-five rights offer to shareholders at 50c a share. Enprise is aiming to raise $1.74m.

Tags: Market Close