NZX 50 surges as RBNZ takes handbrake off economy

New Zealand’s benchmark index surged as the Reserve Bank of NZ started unshackling the economy with a rate cut and signalled more to come.

Wednesday, August 14th 2024, 6:21PM

by BusinessDesk

The S&P/NZX 50 Index jumped 253.47 points, or 2.1%, to 12,572.53. Across the main board, 114 stocks rose, 18 fell, and 47 were unchanged. Turnover was $131.2 million, with nine companies trading on volumes of more than a million shares.

The local stock market enjoyed broad-based gains as Reserve Bank of NZ (RBNZ) governor Adrian Orr and the monetary policy committee surprised many commentators by cutting the official cash rate (OCR) a quarter-point to 5.25% and projecting further reductions to come.

“It certainly was a dovish surprise from governor Orr and the committee,” Shane Solly, a portfolio manager at Harbour Asset Management, said. “It’s a relief for the economy, which is under real pressure.”

Local market

Industrial stocks benefited from easier economic conditions, which could potentially provide a tailwind to future activity.

Fletcher Building, which also appointed Summerset Group exec Will Wright as its new chief financial officer on Wednesday, climbed 4.1% to $3.32 on a volume of 1.4m, while Mainfreight advanced 4% to $75.50.

Freightways Group, often seen as an economic bellwether, climbed 5.3% to $9.48, and Move Logistics jumped 7.7% to 35 cents.

Still, Solly said the economic relief won’t be immediate: “It will take time for rates to stimulate activity.”

Commercial landlords are often the first to benefit from lower interest rates. Kiwi Property Group rose 5.1% to 93.5 cents on a volume of 2.6m shares, Stride Property gained 2.3% to $1.34 with 1.8m shares traded, and Precinct Properties NZ advanced 2% to $1.27 with 1.5m shares changing hands.

Retirement village operators are also likely to be among the bigger winners from rate cuts if easier conditions spur on increased sales volumes. Ryman Healthcare climbed 5.6% to $4.90 on a volume of 2.1m, and Summerset gained 4% to $11.75.

The local company reporting season hits its stride next week, although Solly doesn’t expect the looser monetary policy stance to filter into companies' outlooks until later this year.

Rubber goods maker Skellerup, which reports on Thursday, rose 2.1% to $4.48.

KMD Group posted the day’s biggest gain as it surged 9.5% to 46 cents, outpacing other retailers which also rallied. Warehouse Group rose 1.7% to $1.22, Michael Hill International gained 1.6% to 63 cents, Hallenstein Glasson advanced 1.7% to $5.87 and Briscoe Group increased 0.7% to $4.43.

Napier Port Holdings rose 2.7% to $2.30, affirming its annual earnings guidance in its nine-month update and shrugging off the temporary shutdowns for two of its biggest customers due to spiking wholesale electricity prices.

Energy and banks

Energy companies extended their gains after Tuesday’s gas supply deal with Methanex eased some security concerns, and Contact Energy’s latest operating metrics were slightly better than expected.

Contact rose 2.1% to $8.70, Meridian Energy advanced 4.9% to $6.69, and Mercury NZ climbed 4.1% to $6.80. Genesis Energy was unchanged at $2.26.

ANZ Group Holdings was among the few companies to fall, slipping 0.5% to $31.05. Commonwealth Bank of Australia, the largest of Australia’s four pillars, beat forecasts with a smaller decline in annual cash profit than expected while declaring a bigger dividend than predicted.

Westpac Banking Corp, the other dual-listed lender of the four Australian majors, rose 2% to $31.80. Heartland Group Holdings, which owns Australia’s Challenger Bank, rose 3.8% to $1.10.

Minnow telecommunications firm Vital halted trading of its shares – last at 28 cents – after receiving a non-binding partial takeover bid from property developer Simon Herbert’s Empire Capital at 37.5 cents.

Arvida Group, under a takeover bid at $1.70 a share, remained heavily traded, with 2.3m shares changing hands. The price remained unchanged at $1.63.

Spark NZ was the most heavily traded stock, increasing 0.2% to $4.40 on a volume of 3.6m. Air NZ rose 0.9% to 55.5 cents on a volume of 1.7m, while Vista International Group ended its five-day rally unchanged at $3.13 on a volume of 1.3m.

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