NZ sharemarket slips ahead of economic and fiscal update

Weaker property stocks and an under-pressure Ebos Group helped push the New Zealand sharemarket to another fall as investors waited for the pre-election economic update.

Monday, September 11th 2023, 6:29PM

by BusinessDesk

The S&P/NZX 50 Index had a choppy session and closed at 11,302.41, down 41.7 points or 0.37%. The index has fallen in eight of the last nine trading days.

There were 44 gainers and 77 decliners over the whole market on light trading of 24 million share transactions worth $78m.

ASB said this week’s Pre-Election Economic and Fiscal Update will show a weaker fiscal position relative to the 2023 Budget forecasts as the economic outlook has softened.

The pace of activity is anaemic, with margin compression eroding corporate profits and the high cost of living weighing on household spending. This means a lower tax take for the government, the bank said.

“The global outlook is troubling with sharply lower export commodity prices likely to depress rural incomes, with the weak profitability backdrop and uncertain outlook making firms wary about investing and hiring. Many households are yet to roll onto higher mortgage rates, and inflation is running at 6%.

“As a result, the return to an underlying budget surplus is likely to be pushed back by a year or so (to 2026/27). The government will also need to issue more debt than anticipated at budget 2023.” The bond programme could be lifted between $8 billion and $12b.

Matt Goodson, managing director of Salt Funds Management, said there is a lot of concern about a significant lift in the deficit track that will push back the return to surplus. “The recent bond auctions haven’t been easy, and it’s a difficult outlook.”

The property sector, slowed down by the higher interest rates, was down 1.57% on the NZX index.

Investore fell 5c or 3.97% to $1.23; Property for Industry decreased 3c to $2.235; Stride shed 5c or 3.65% to $1.32; Vital Healthcare Trust was down 4.5c or 2.14% to $2.06; and Argosy declined 1c to $1.12.

Goodman Property Trust was down 4c or 1.85% to $2.12 after telling the market that its six-month result is likely to include a $230m or 4.7% reduction in the valuation of its portfolio, worth $4.7 billion at the end of September.

The revaluation is expected to reduce Goodman’s net tangible assets by 16c to about $2.29. Goodman said while current investor sentiment is being impacted by higher interest rates and macroeconomic conditions, industrial property market fundamentals remain strong.

Heavyweights decline and rise

Ebos Group fell $1.48 or 4.08% to $34.81; Fisher and Paykel Healthcare slipped a further 21c to $21.24; Fletcher Building declined 6c to $4.64; and PGG Wrightson decreased 11c or 2.84% to $3.77.

Contact Energy increased 23c or 2.82% to $8.40; Freightways was up 15c or 1.81% to $8.45; and Vulcan Steel rose 62c or 6.98% to $9.50.

Retirement village operators fell, with Summerset Group down 13c to $9.77 and Oceania Healthcare slipping 2c or 2.6% to 75c.

In the retail sector, Briscoe Group was down 16c or 3.43% to $4.50; KMD Brands declined 2c or 2.53% to 77c and Hallenstein Glasson decreased 4c to $5.90.

Vista Group shed 4c or 2.56% to $1.52; NZME declined 2c or 2.13% to 92c; Bremworth fell 5c or 10.2% to 44c; and Cooks Coffee was down 0.009c or 4.52% to 19c.

Transport technology company Eroad plunged 36.5c or 31.33% to 80c, near the adjusted price for its latest capital raise.

Eroad raised $17.6m from the institutional placement. The retail offer of one new share for every 2.06 held at 70c each opens this week, and Eroad is seeking to raise a total of $50m.

The bulk of the institutional offer was taken up afterwards in the shortfall bookbuild after $13.3m worth of entitlements were passed, including those from the two largest shareholders. The rights offer raised $4.3m from eligible institutional shareholders. The shares cleared in the bookbuild at 70c each.

Goodson said the adjusted price for the share issue was a very painful experience for existing shareholders, and they could be asking serious questions about why the board turned down the takeover bid (by Brillian APAC at $1.30 per share).

Cancer diagnostics company Pacific Edge, up 0.003c or 3.16% to 9.8c, has provided written submissions to Medicare contractor Novitas detailing why its Cxbladder tests should continue to receive US health funding.

The submissions, including those from US urologists, argue strongly that Cxbladder Triage, Detect and Monitor tests should retain Medicare coverage based on the clinical value they offer to patients, clinicians, and healthcare payers.

Other gainers were Auckland International Airport adding 9c to $8; Spark gaining 5.5c to $4.975; Comvita increasing 6c or 1.89% to $3.23; Move Logistics up 2c or 3.08% to 67c; and Fonterra Shareholders’ Fund collecting 6c or 1.87% to $3.27.

MHM Automation gained 3c or 3.13% to 99c after former Ritchies Transport chief executive Andrew Ritchie and two fellow trustees increased their shareholding to 5.6%.

Tags: Market Close