NZ sharemarket 'lacklustre' as earning seasons closes out

As February’s varied earnings season wrapped up, Thursday’s trading on the New Zealand stock exchange produced more of the month's flavour: slow and steady decline.

Thursday, February 29th 2024, 6:31PM

by BusinessDesk

The S&P/NZX 50 Index closed at 11,741.47, down 21.85 points or 0.19%. There were 59 gainers and 75 decliners over the whole market with 345.8 million share transactions worth $597.6m.

“Markets have been a little bit mixed in Asia in general, and we [New Zealand] are trading to the downside,” Craigs Investment Partners investment adviser Peter McIntyre said.

“Performance has been lacklustre,” he added. “Today was sort of a continuation of the recent weakness we've had in our market because, you know, we're trading down 1.3% this month.”

However, the day was not all doom and gloom.

Meridian Energy grew 4.55% off the back of a positive earnings report on Wednesday in which the company raised its dividend by 2.5% to 6.15 cents per share.

Likewise, Oceania gained 1.72% to $0.59. The healthcare company announced on Monday that it had secured almost a hectare of prime residential property next to its 1.3-ha retirement development in St Heliers, The Helier.

Oceania Healthcare chief executive Brent Pattison resigned the following day.

High Volumes

Trading volumes were dominated by Abu Dhabi Investment Fund-owned company Haumi selling its entire $262m stake in listed property developer Precinct Properties.

Without the block trade of its 15% shareholding, which is underwritten by investment bank Jarden, the total traded value for the day would have been 335.6m – still high by recent standards.

“They are a very significant global investor, and while we don’t have any insight on their decision, we understand their sale is a portfolio allocation decision,” Precinct deputy CEO George Crawford told BusinessDesk.

The block trade has likely made investors cautious about their holdings in the property sector at large, McIntyre said.

“If you look at real estate in general today, it is a decliner right across the board,” he said. “Not only Precinct is weaker but the whole sector in general is. I think Vital Healthcare is the only one that's trading flat.”

With volumes of $47.6m, the second highest traded share was Auckland International Airport which fell a marginal 0.86% to $8.10. NZ's largest airport has had it rough since the beginning of 2024, falling 7.95%.

Earnings Season

Several NZ stock exchange (NZX) companies posted earnings on Thursday, producing more mixed-bag results in a mixed-bag season.

At the top of the pack, NZ Oil & Gas saw its shares rise 15.07% to $0.42 after the company reported a net profit after tax (Npat) of $7.0m for the half-year ending Dec 31, constituting an increase of 112% over the period.

The company also announced a “special dividend” of 3.2 cents per share, returning around $7.1m in total to shareholders.

Commercial refrigeration company AoFrio reported a 10.5% decrease in revenue for the 2023 financial year, amounting to $66.6m. The company’s stock declined 1.56% to $0.063, but only small volumes were traded.

As with other companies who posted full-year results this earning season, such as Restaurant Brands and NZME, AoFrio saw an improvement in its second-half results compared to the first half – indicating the economic environment may be improving.

To round it out, despite reinstating its dividend after reporting a full-year net profit of $10.9m, NZ Rural Land Company shares were flat, staying at $0.93.

Rates dampen trading

The Reserve Bank of NZ’s (RBNZ) announcement yesterday to keep the official cash rate (OCR) at 5.5% has likely prompted some of the caution that we are seeing, McIntyre said.

“They're likely to hold interest rates longer than what probably the market anticipated,” he said. “That’s likely to put a dampener on our market.”

Tags: Market Close