Gas supply buoys Contact, Genesis as markets await RBNZ

New Zealand shares were broadly stronger, with Genesis Energy and Contact Energy among the day’s gainers after cutting a deal to secure gas supply in the current energy shortage.

Tuesday, August 13th 2024, 6:15PM

by BusinessDesk

The S&P/NZX 50 Index rose 37.81 points, or 0.3%, to 12,319.06. Across the main board, 87 stocks gained, 44 fell, and 48 were unchanged.

Turnover was $94.4 million, less than the $137m average value traded in July.

Genesis rose 1.4% to $2.26, and Contact advanced 1.7% to $8.52 after the electricity generator retailers secured enough gas to keep their gas-fired units running until October when Methanex agreed to temporarily idle its NZ methanol production for the next couple of months.

Transpower is also working to let hydro generators draw on backup reserves in the dams earlier than usually allowed. Meridian Energy rose 1.3% to $6.38, Mercury NZ gained 1.4% to $6.53, and Manawa Energy slipped 2.2% to $4.07. Infratil, which owns half of Manawa, decreased 0.1% to $10.56.

“Hydro levels are down, and they’re trying to lower them even further to get more energy,” Peter McIntyre, an investment adviser at Craigs Investment Partners, said. “We really need to get more on the hydrology front.”

The Reserve Bank of NZ (RBNZ) will review monetary policy on Wednesday and while market pricing is leaning towards a cut to the 5.5% official cash rate (OCR), local economists are more circumspect. The higher interest rates have weighed on prices of companies typically held for their dividend, which have become less attractive relative to the safety of bank deposits.

McIntyre said those rate sensitive stocks in property, energy and infrastructure were generally stronger today, although he noted that the current energy squeeze was another inflationary pressure weighing on the central bank.

Other stocks

Retirement village operator Summerset Group rose 3.7% to $11.30, lines company Vector advanced 1.9% to $3.74, Investore Property was up 1.7% at $1.18, Spark NZ gained 1.6% to $4.39 on a volume of 2m, and Goodman Property Trust increased 1.5% to $2.06.

ANZ Group Holdings led the benchmark index higher, up 3.8% to $31.20, while Westpac Banking Corp rose 2.2% to $31.18. UBS analysts upgraded the dual-listed banks, saying they underestimated the lenders' excess capital.

Vista Group International extended its rally for a fifth day, rising 3.6% to $3.13. The cinema software analytics company has been on the march higher since reporting fatter first-half earnings margins and indicating a stronger second half was to come.

Fletcher Building rose 2.2% to $3.19, shrugging off a weak result from James Hardie in Australia, which said weak demand weighed on its business across the Tasman.

Outside the benchmark index, PGG Wrightson dropped 9.5% to $1.81 after reporting a slump in annual profit and canning its dividend.

McIntyre said the weakness in the primary sector was already priced in, but the lack of dividends and bleak outlook weighed on the company.

Skellerup Holdings, which makes rubber goods, is due to report on Thursday. It fell 2.4% to $4.39, posting the biggest decline on the benchmark index.

Milk processor Synlait Milk fell 3.5% to 28 cents, while The a2 Milk Co declined 1.3% to $7.35 and Fonterra Shareholders’ Fund units declined 1.2% to $4.14. Allied Farmers rose 1.2% to 82 cents, while rural landlord NZ Rural Land Co increased 2.2% to 92 cents.

Dual-listed would-be miner Santana Minerals climbed 6% to $1.41, joining a rally across the minerals sector in Australia on stronger spot gold prices.

Comvita increased 0.9% to $1.15 after announcing chair Brett Hewlett will step down from the board and take over as acting chief executive due to an extremely poor 2024 result to focus on cutting costs and improving margins. Chief David Banfield will step down at the end of the month while providing advice on short- and medium-term goals.

Turners Automotive Group slipped 0.2% to $4.30 after saying it invested $1m in Quashed for a 13% stake in the online insurance platform.

Arvida Group, under a takeover offer at $1.70 a share, was the day’s most heavily traded stock, unchanged at $1.63 on a volume of 4.5m.

Lender Heartland Group Holdings was unchanged at $1.06 on an unusually large volume of 2.2m, while Pacific Edge rose 9.1%, or 0.8 of a cent, to 9.6 cents with 1.6m shares changing hands.

Ryman Healthcare slipped 0.4% to $4.64 on a volume of 1.4m, and Eroad advanced 1.5% to $1.35 on a larger-than-usual volume of 1.1m.

Tags: Market Close