NZ shares left behind as Asian markets rally after Nikkei rout

New Zealand shares fell for a third day, having been left behind by the recovery across Asia after Monday’s rout in Japan, as economists ratcheted up calls for interest rate relief to ease a slowing economy.

Tuesday, August 6th 2024, 6:35PM

by BusinessDesk

The S&P/NZX 50 Index dipped 18.73 points, or 0.2%, to 12,245.76. Across the main board, 87 stocks fell, 59 rose, and 33 were unchanged. Turnover was $136.1 million, in line with the July daily average value of $137m, with Arvida accounting for $22.9m of the day’s trading.

NZ’s benchmark index was among the laggards across Asia as other markets recovered from widespread selling on Monday when Japan’s Nikkei 225 had the worst day of trading since the 1987 crash on fears about a US recession and concerns that tech investments funded by a cheap yen were being rapidly unwound.

“New Zealand never got hit as hard, and it’s been a bit of a laggard,” said Greg Smith, head of retail at Devon Funds Management. “We don’t have the tech exposure that America has; we’ve got quite different drivers and pressures here.”

Many central banks have projected looser monetary policy as runaway inflation comes under control.

On Tuesday, Bank of NZ and Kiwibank economists pushed for the Reserve Bank of NZ to cut the official cash rate at next week’s meeting. Local jobs data on Wednesday will be closely watched to see whether it nudges the central bank to cut earlier.

The Reserve Bank of Australia held its cash rate at 4.35%, as expected, and said inflation was stickier than previously thought while also raising its growth forecast.

Local market

Manawa Energy led the benchmark lower, falling 3.6% to $4.28 on a light volume of 10,730, while Meridian Energy declined 0.4% to $6.435 on a volume of 1.1m. Other energy companies gained, with Mercury NZ rising 1.3% to $6.945, Contact Energy advancing 0.4% to $8.52 and Genesis Energy increasing 0.2% to $2.165.

Fletcher Building dropped 2.6% to $3.05. The building materials company acknowledged a class action was filed in the Federal Court of Australia against its Iplex subsidiary over claims its pipes leaked in Western Australian homes and said it’s defending the claim.

Retirement villages and aged care operators, which are often linked to the interest rate-sensitive residential property market, were also broadly weaker. Oceania Healthcare fell 2.6% to 75 cents on heavier trading than usual, with 2.8m shares changing hands, while Summerset Group slipped 1.9% to $11.15. Ryman Healthcare rose 0.5% to $4.50 on a volume of 1.9m shares.

Arvida, which currently faces a takeover at $1.70 a share, was unchanged at $1.63 and was the most heavily traded stock on the bourse, with 14.1m shares traded.

Minnow aged care operator Radius Residential Care dropped 9.1%, or 2 cents, to 20 cents. At Tuesday’s annual meeting, it told shareholders that first-quarter occupancy and earnings rose without providing details.

Vista Group International was among the brighter spots on the bourse, rising 1.7% to $2.40 after reporting a narrower first-half loss and signalling a stronger second-half with box office winners such as Inside Out 2 and Deadpool & Wolverine.

Smith said Vista’s result was a good one despite paring annual revenue guidance, with the cinema software analytics firm executing well on its software-as-a-service model and with new customers on the horizon.

“The box office is in reasonable shape,” he said.

Vital Healthcare Property Trust will report its earnings later this week. Its units were unchanged at $1.91.

Pay-TV operator Sky Network Television rose 2.7% to $2.67, posting the biggest gain on the benchmark index. Publisher NZME climbed 4.1% to $1.02.

Among the more heavily trading stocks, Spark NZ fell 1.8% to $4.34 with 2.6m shares traded, Air NZ declined 0.9% to 56 cents on a volume of 1.4m, The a2 Milk Co dropped 1.7% to $7.36 with 1.3m shares changing hands, and Precinct Properties NZ slipped 1.2% to $1.20 on a volume of 1.1m.

(This story had been corrected to fix a spelling mistake in the first par.)

Tags: Market Close