Reserve Bank casts shadow over NZ sharemarket

The Reserve Bank of New Zealand put a big dampener on the NZ sharemarket with its higher-for-longer interest rates approach after Fisher and Paykel Healthcare lifted spirits with a pleasing half-year financial result.

Wednesday, November 29th 2023, 6:20PM

by BusinessDesk

The S&P/NZX 50 Index surged more than 1.2% to an intraday high of 11,409.2 points during lunchtime at the peak of market heavyweight Fisher and Paykel’s trading.

But the index came back to earth and finished flat at 11,235.94, down 1.43 points or 0.01%, following the Reserve Bank of NZ’s (RBNZ) latest monetary policy statement.

There were 96 decliners and just 34 gainers on the main board, with 34.86 million shares worth $180.06m changing hands.

The RBNZ left the official cash rate unchanged at 5.5% but, in a surprise to the market, increased the forecast peak to 5.69%.

The bank said there wouldn’t be any rate cuts until mid-2025 – longer than the expected May next year. Inflation (at 5.6%) remained too high, and monetary policy would remain restrictive.

The NZ dollar strengthened more than half a cent against the American greenback to US61.9c, from US61.29c.

Across the Tasman, the October consumer price index showed inflation in Australia has fallen to 4.9%, from 5.6% in the year to September.

Greg Smith, head of retail with Devon Funds Management, said the RBNZ delivered “a hawkish hold, and that’s not vastly different to other central banks. I guess the bank didn’t want to signal any cuts, reheat the economy and undo all the work to get inflation down.”

Fisher and Paykel Healthcare rose $1.31 or 5.82% to $23.80 after reaching an intraday high of $25.12 and surged past Meridian Energy ($13.26 billion) as the biggest local stock on market capitalisation, with $13.85b.

The healthcare company reported a 16% increase in revenue to $803.7m and a 12% rise in net profit to $107.3m for the six months ending September – numbers that surprised the market. The company had earlier indicated revenue of $790m and profit of $95m-$105m.

Fisher and Paykel is now expecting full-year revenue of $1.7 billion (last year $1.58b) and net profit of $250m.26m (last year $250.3m). Fisher and Paykel is paying an increased interim dividend of 18c a share on Dec 18.

Elsewhere on the market

Leading retirement village stock Ryman Healthcare was down 8c at $5.22 after reporting a 17.8% increase in revenue to $322.96m and a 3.8% decline in net profit to $186.68m for the six months ending September. It is not paying an interim dividend.

Ryman told the market it is in a reset phase with building development matching sales activity and has stopped work or is selling the land on five sites. There were 699 sales, down 9.5% on the same period last year.

Ebos Group was up $1.36 or 3.82% to $36.99 on trade worth $35.23m; Freightways collected 12c to $8.13; and Mainfreight gained $1.37 or 2.1% to $66.72.

Meridian shed 16c or 3.02% to $5.13; Mercury was down 13c or 2.09% to $6.08; Sky TV declined 7c or 2.44% to $2.80; Tourism Holdings decreased 9c or 2.54% to $34.46; Arvida Group fell 5c or 4.72% to $1.0; and Oceania Healthcare was down 21c or 2.78% to 70c.

Leading banks ANZ and Westpac fell 85c or 3.31% to $25.91 and 60c or 2.58% to $22.65 respectively.

Eroad increased 6c or 7.59% to 85c after delivering a 4% increase in half-year revenue of $88.86m and a net loss of $1.2m. Eroad confirmed full-year revenue growth guidance of 6-9% ($175m-$180m) and expects to have positive free cashflow in the latter part of next year.

Argosy Property, down 4c or 3.48% to $1.11, reported half-year revenue of $58.43m, up 6.3%, and a net loss of $19.8m, mainly due to a $50.8m reduction in the value of its portfolio. Argosy achieved 3.6% rental growth and confirmed a full-year dividend guidance of 6.65c a share.

Gentrack, which is winning new contracts and expanding into Europe, Middle East, Southeast Asia and India (for engineering), climbed a further 15c or 2.65% to $5.80.

Tags: Market Close