NZ shares rally as economy edges out of recession

New Zealand shares rallied as data showed a swelling population helped drag the economy out of recession.

Thursday, June 20th 2024, 6:18PM

by BusinessDesk

The S&P/NZX 50 index rose 100.62 points, or 0.9%, to 11,771.81. Across the main board, 90 stocks gained, 45 fell and 46 were unchanged. Turnover was $130 million.

Government data showed gross domestic product grew 0.2% in the March quarter, with primary production a tailwind for the economy. Still, strong migration underpinned overall spending and GDP shrank 0.3% on a per capita basis, its sixth quarterly contraction in a row.

Courier and information management firm Freightways, often seen as a bellwether for the economy, fell 1.4% to $7.72.

“There is no depression in New Zealand according to the data,” Shane Solly, a portfolio manager for Harbour Asset Management, said. “Underlying it all, the higher interest rates are doing their job.”

Solly said investors have been anticipating interest rate cuts, but have dialled back some of that optimism after digesting comments by Reserve Bank chief economist Paul Conway on Wednesday about the central bank’s path to taming inflation.

“Markets are thinking about rate cuts, but whether the Reserve Bank committee is thinking about rate cuts remains to be seen,” he said.

Energy companies were among the day’s gainers, with Genesis Energy leading the index higher, rising 3.4% to $2.15. Mercury NZ advanced 1.9% to $6.52, Contact Energy increased 0.7% to $9.08, and Meridian Energy rose 0.6% to $6.25.

NZ Windfarms rose 1.5%, or 0.2 of a cent, to 13.3 cents. The company yesterday said Meridian chief executive Neal Barclay was departing its board to avoid any potential conflicts of interest if the two companies pursue development opportunities together.

Ageing population

Small-cap aged care operator Radius Residential Care posted the day’s biggest gain across the main board, climbing 8.5%, or 1.2 cents, to 15.4 cents after Forsyth Barr started covering the stock, and pointed to long-term upside from an ageing population and shortfall of care beds.

Among other retirement village and aged care operators, Ryman Healthcare gained 3.3% to $3.75 on a volume of 1.6m, Summerset Holdings advanced 1.2% to $9.26 and Arvida rose 2.2% to 93 cents, while Oceania Healthcare was unchanged at 51 cents.

Infratil rose 0.9% to $11.18 on a volume of 2.5m shares after opening the $150m retail offering component having raised $1 billion in a placement to institutional investors earlier this week. The infrastructure investor is raising funds to accelerate growth in its CDC datacentre business.

Channel Infrastructure slipped 1.3% to $1.50. Oil company BP NZ sold its stake in the import terminal yesterday in a block trade at $1.46 per share.

Blue chip stocks that had been sold by investors to participate in Infratil’s placement and the Channel block trade were among today’s gainers, with Spark NZ up 2% at $4.07 on a volume of 1.9m and Auckland International Airport rising 1.7% to $7.58.

The exuberance of the Guzman y Gomez initial public offering in Australia – where the Mexican-themed restaurant’s shares surged 36% on debut – didn’t rub off on NZ-listed Restaurant Brands, which was up 0.3% at $2.93.

The IPO was Australia’s biggest in three years and there are hopes it will revive new listings across the Tasman. In NZ, the NZX has also struggled to attract new listings. The NZ stock market operator’s shares rose 2.9% to $1.08.

Fonterra Shareholders’ Fund units rose 1.5% to $4.06. The dairy cooperative announced some executive changes on Thursday and said one of its managers will take over as CEO of its Kotahi Logistics joint venture with Silver Fern Farms. Port of Tauranga, which has an alliance with Kotahi, rose 1.7% to $4.73.

Rakon extended its decline after ending talks with a potential suitor this week. The stock fell 4.5% to 64 cents.

Synlait Milk remained under pressure, falling 3.5% to 28 cents, a new low.

Among companies holding annual meetings next week, T&G Global fell 1.2% to $1.68, Eroad declined 1.9% to $1.01, Investore Property rose 1% to 99 cents, and Kiwi Property advanced 1.3% to 80.5 cents.

Stride Property was the most heavily traded stock, rising 0.8% to $1.20 on a volume of 6.1m. Tourism Holdings fell 1.1% to $1.78 on a volume of 2.4m, Tower was unchanged at 84.5 cents with 1.3m shares changing hands and Gentrack climbed 2% to $10.35 with 1.1m shares traded.

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