Sharemarket rises on quarter-end buying

The New Zealand sharemarket clawed back lost ground on the back of end-of-quarter buying to finish with a strong gain.

Friday, September 29th 2023, 6:30PM

by BusinessDesk

The S&P/NZX50 ended 118.40 points, or 1.06%, higher at 11,296.43, almost erasing Thursday’s late 1.25% decline. Total trades were worth $190.6m. There were 185 rises and 41 falls.

The gain came at the end of a hard month for sharemarkets here and around the world after key US 10-year bonds hit 4.59% from just 4.11% at the start of the month.

“When the discount rate goes up like that, then all other financial assets, including equities, should fall,” Salt Funds managing director Matt Goodson said.

“The market was sold down very hard at the close yesterday, which was unusual,” he said. “Today was the end of the quarter, and the market has ended with a reasonable gain.”

Clothing retailer Hallenstein Glasson ended 35c or 6.1% higher at $6.09 after reporting a near 25% increase in net profit to $31.98m for the 12 months to Aug 1. Group sales were $409.7m – up 16.7%.

All brands’ sales performance was well ahead of the prior corresponding period – in part due to the adverse impact in the prior year of the numerous lockdowns in both NZ and Australia.

“Hallenstein’s result was pretty consistent with what we have seen from a lot of the retailers at the moment,” he said. “It was a reasonable result given the tough economic environment,” Goodson said.

Late to fire

Contact Energy was unchanged at $8.04 after announcing that it now intends to bring its Tauhara geothermal project online in the first quarter of the 2024 year from the previously advised fourth quarter of this year.

The delay reflected a longer than expected commissioning period, with remediation required on a number of steam field valves to ensure the performance of safety systems, it said. Goodson said the implications of the delay were minor.

“One of the interesting things that we are seeing from the retailers is the sharp fall in transport costs,” Goodson said.

On that score, transport firm Mainfreight had been weak but ended with a strong surge, closing $2.38 or 3.8% higher at $65.18.

Mainfreight had been a beneficiary of high transport costs over the last three or four covid-affected years, but analysts who cover the stock now have that benefit coming out.

“It’s been under pressure on concerns that earnings might come under pressure as freight rates peel off and as economies do it hard, but today we have seen a noticeable bounce,” Goodson said.

Used car dealership 2 Cheap Cars put on another 9c, or 11,8% to close 85c, having gained 14 cents on Thursday.

The company earlier this week issued an upbeat earnings guidance for the year of $5.2m-$5.7m.

Cash-strapped Synlait Milk continued to regain ground after being sold down on news that a2 Milk wanted to end its exclusivity manufacturing agreement.

The stock finished at $1.43, up 5c. The dairy company’s bonds, which fall due in December next year, traded at 17.5%.

Synlait has a cash repayment of $130m due in March next year, but a successful sale of its DairyWorks business, estimated to be worth up to $150m, is expected to take a lot of pressure off its balance sheet.

A2 Milk, Synlait’s biggest customer and 20% shareholder, finished 6c higher at $4.56.

Tags: Market Close