NZ market ticks up as school holidays kick off

A late, index-related buying surge took the New Zealand sharemarket into positive territory at the close after spending most of the day in the red.

Monday, September 25th 2023, 6:23PM

by BusinessDesk

The benchmark S&P/NZX50 index ended 53.88 points or 0.48% higher at 11,372.62. Volume was on the light side at $93 million.

Harbour Asset Management portfolio manager Shane Solly said the late push higher may reflect some optimism “that we have seen a low point for economic activity and company earnings”.

For the most part, the market had spent the day battling with higher interest rates here and around the world.

“The New Zealand sharemarket has been pretty weak, as have many other capital markets,” Solly said. “Just where interest rates are now makes it a bit tougher for our market.

“There have been some pretty big moves in US bond yields, which have echoed through the rest of the globe. There has been this ongoing contest between interest rates and equity markets.”

US 10-year bond yields traded at 5.13% from below 5.0% at the start of the month.

“That generally has put capital markets on the back foot. We saw some weakness in the US market, and some of that has flowed through to this part of the world,” Solly said.

NZ 10-year-bond yields are now at 5.19%, their highest point since 2011, which Solly said placed a higher hurdle on the local market’s ability to deliver competitive returns.

On the market

The market overall appeared to be suffering from concerns about higher interest rates after the week’s stronger-than-expected 0.9% gain in GDP for the June quarter.

Fletcher Building lost four cents to end at $4.62 on the back of economic uncertainty but also perhaps due to “choppiness” before the Oct 14 election, Solly said.

The late buying surge took Fisher & Paykel Healthcare up from a low point of $21.53 to end at $21.88, down 3c.

The stock, along with its competitor ResMed, has continued to be buffeted by the advent of “GLP-1″ a pharmaceutical product that causes weight loss. F&P’s respiratory products are typically used on overweight patients.

Ryman Healthcare ended 8c up at $4.62 after announcing that it had extended its bank facilities and made an amendment to its interest coverage ratio covenant. The company’s bank facility limit has been increased by $119m to $2.6b.

Solly said the new deal gives Ryman some flexibility in the medium term, Solly said.

Shares in Synlait Milk, which reports its annual result on Monday, firmed 2c to $1.27.

The cash-strapped dairy company has already told investors that, after a series of earnings downgrades, they can expect a loss of up to $5m or a profit of up to $5m.

The company’s announcement this week that it had reached a refinancing deal with its banking syndicate did little to calm nerves in the debt market, where it has $180m on bonds trading on the NZX’s debt platform.

Under the new refinancing deal, Synlait needs to repay $130m by early next year.

“There is a clock ticking, but we look forward to getting more detail on Monday,” Solly said.

The bonds, which mature in December next year, were quoted at 17.5% on the NZX debt market compared with 8.3% this time last year.

Meanwhile, the closely aligned a2 Milk’s share price gained 4c to $4.66.

Fonterra Shareholder Fund units, which give investors access to the co-op’s dividends, continued to strengthen after Thursday’s stronger-than-expected result, finishing up 9c at $3.55.

Auckland International Airport (AIA), which is involved in a fracas with airlines over congestion at the airport, dropped 10c to $7.79.

The airlines say AIA is selling its customers short, and travellers are facing unacceptable delays, while the airport has hit back, saying airline tardiness is contributing to passengers’ frustration.

In a sign of sharply escalating tension between the airport company and its airline customers, the airport today released details on international flight delays, which it says show only around half of services are running on time.

An Auckland airport spokesperson said currently, only 51% of international flights from May to August this year were arriving on time – within 15 minutes of that schedule.

“Auckland airport is proud to be the gateway to New Zealand for tourism and freight. As a system, we need to be geared to efficiently manage flights, as the economy relies on these international connections.”

Tags: Market Close