NZ sharemarket rallies with $670m turnover on index changes
The New Zealand sharemarket staged a broad-based rally, gaining nearly one percent, following the Reserve Bank of NZ’s surprise forecast of an increased official cash rate the day before.
Thursday, November 30th 2023, 6:28PM 
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by BusinessDesk
The S&P/NZX 50 Index traded strongly in the afternoon in an extended session for the quarterly rebalancing of the MSCI global indices.
The index closed at 11,330.2, up 94.26 points or 0.84%, after reaching an intraday low of 11,192.86 points.
A massive 127.24 million shares worth $670.66m changed hands, with a2 Milk and Summerset Group dropping out of the MSCI Small Cap Index and Arvida Group out of the Micro Cap Index.
There were 81 gainers and 56 decliners on the main board.
Summerset was down 26c or 2.72% to $9.31 on trade worth $91.49m; a2 Milk declined 11c or 2.58% to $4.15 on trade of $103.86m; and Arvida decreased 2c or 1.98% to 99c.
Auckland International Airport, up 2c to $7.92, was the second heaviest traded stock with $95.1m.
Jeremy Sullivan, investment advisor with Hamilton Hindin Greene, said the local market had “a bit of a relief rally after the change in the Reserve Bank forecast. It’s still an interest rate story.”
The bank’s cash rate forecast peak is now 5.69%, up from the present 5.5%. United States markets are pricing in a Federal Reserve rate cut in May next year.
Sullivan said wholesale interest rates did fall slightly, and this helped the (dividend-paying) energy and property stocks.
ANZ Research said business confidence lifted another eight points to plus 31 in November, and expected own activity increased three 3 points to plus 26.
Mercury Energy rose 15c or 2.47% to $6.23; Meridian gained 8.5c to $5.215; and Contact was up 13c or 1.71% to $7.74. Precinct Properties gained 1.7c to $1.14, and Property for Industry was up 2.5c to $2.20.
Other leading stocks Fletcher Building gained 16c or 3.58% to $4.63; Chorus added 13.5c or 1.79% to $7.665; Mainfreight collected 78c to $67.50; and The Warehouse improved 12c or 7.06% to $1.82.
In the retirement sector, Oceania Healthcare rose 4c or 5.71% to 74c, and Ryman Healthcare was up 18c or 3.45% to $5.40.
SkyCity, up 5c or 2.78% to $1.85, told the market the high court had backed Sky’s interpretation of the Auckland car park concession agreement with MPF Parking NZ. The payment to MPF will be calculated on the SkyCity valuer’s methodology.
Other gainers were Restaurant Brands, up 15c or 4.01% to $3.89; PGG Wrightson, increasing 11c or 3.26% to $3.48; T&G Global, adding 4c or 2.16% to $1.89; and Vulcan Steel, collected 17c or 2.18% to $7.97.
Fisher and Paykel Healthcare was down 24c to $23.56 following its bounce the day before after reporting a solid half-year result. Sullivan said the stock is very volatile and may be affected by the fluctuating cross-rate between the NZ and American dollars.
The Colonial Motor Co declined 40c or 4.19% to $9.14; Eroad was down 4c or 4.19% to $9.14; and Accordant Group continued to fall, down 7c or 7.22% to 90c after starting the week at $1.09.
Genesis Energy, unchanged at $2.37, told the market it will use profits from the Kupe gas field to support a $1.1b programme to build new renewable generation and grid-scale battery storage for some 8,300GWh between now and 2030. Genesis’ present renewable generation is 3,200GWh.
Radius Residential Care, down 0.003c or 2.14% to 13.7c, confirmed it had sold the Arran Court care home in Henderson for $19m net proceeds, which will be used to repay existing debt.
Green Cross Health declined 5c or 4.35% to $1.10. The Life Pharmacy operator reported steady half-year revenue of $250m and a 21% fall in net profit to $5.6m. It is paying an interim dividend of 2.5c a share on Dec 20.
| « Reserve Bank casts shadow over NZ sharemarket | NZ sharemarket ends first day of summer on a positive note » |
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The next 3 quarters are I think 5.54%, 5.58% and 5.9%.
Current level is 5.50% p.a.
Normal changes have been multiples of 0.25%.
A 25 bp increase 2 weeks before 31 dec would give a 4bp increase for the quarter average. But the next quarter would start at 5.75%.
It would need to reduce 25bp 2 weeks into January to get the average for that quarter down to 5.58%. But the June quarter would start at 5.50 and would need to increase again to hit the projected 5.59%.
That track doesn't seem at all plausible to me.