NZ sharemarket falls almost 1.5% as indexes rebalance

The New Zealand sharemarket declined nearly 1.5% as stock prices bounced wildly on index rebalancing despite a sharp rebound on Wall Street.

Friday, September 20th 2024, 6:34PM

by BusinessDesk

The S&P/NZX 50 Index fell 186.5 points or 1.47% throughout the day, closing at 12,478.5.

The index finished the week down nearly 2.8% and is now 6.2% ahead for the year.

There were 75 gainers and 68 decliners over the whole market on heavy volume of 249.1 million transactions worth $776.79m.

The NZX, Australian ASX, FTSE Russell, and VanEck Exchange Trade Funds indices all underwent quarterly rebalances, and local trading was extended.

'Like spring cleaning'

Shane Solly, portfolio manager with Harbour Asset Management, said the index changes all collided to create extreme moves in share prices.

“Five major moves going on all day – it was like spring cleaning,” he said. “These (index) washing machine days do throw up opportunities for patient investors with some stocks coming back a long way. It’s just a timing issue.”

Solly said there was a strong bounce in the US after the markets digested the commentary from Federal Reserve chair Jerome Powell that “all is not bad.” And the Bank of Japan held its cash rate at 0.25% after increasing the previous month and saying it was in watching mode.

The Dow Jones Industrial Average and S&P 500 indices reached new all-time highs after investors changed their mind about the state of the US economy.

The initial reaction after the Federal Reserve’s jumbo 0.5% interest cut was that the economy was worse than people thought but latest data showed the economy is heading for a soft landing.

Federal Reserve chair Jerome Powell commented the move to a less restrictive policy stance was more appropriate but also that a super-sized rate hike was not going to be the norm, and did not suggest that the world’s largest economy is in trouble.

Weekly jobless claims fell 12,000 to a four-month low of 219,000 instead of an expected 230,000, showing a stronger labour market. Continuing claims were slightly lower at 1.829m.

The Federal Reserve Bank of Philadelphia reported its general activity index rose from minus 7.0 to 1.7 in August, beating forecasts for a negative reading.

Around 22% of firms reported increased activity, while 51% reported no change.

Local market

Solly said Auckland International Airport has increased its weighting on the NZX following its capital raising and “everything else has gone down”.

The Auckland airport, down 31.5c or 4.22% to $7.145, issued nearly 180m new shares in its $1.2 billion institutional placement.

Fisher and Paykel Healthcare’s weighting has slipped below 17% and it fell $1.04 or 2.77% to $36.56. Other stocks affected by a reduction in weighting were Infratil, down 15c to $12.25; Chorus declining 10c to $8.90; Contact decreasing 16c or 1.93% to $8.15; and Spark shedding 3c to $3.28.

Solly said there was some speculation that Spark will fall out of some global indices.

Ryman Healthcare was down 11c or 2.41% to $4.45; Summerset Group declined 31c or 2.62% to $11.51; Synlait Milk decreased 1.5c or 3.49% to 41.5c; and Comvita shed 4c or 3.36% to $1.15.

Other sharp movers were Serko falling 32c or 9.55% to $3.03; Vista Group declining 8c or 2.87% to $2.71; Skellerup down 30c or 6.3% to $4.46; Smartpay easing 5c or 4.55% to $1.05; and Blackpearl Group shedding 19c or 12.42% to $1.34.

In the property sector, Argosy was down 4c or 3.69% to $1.045; Property for Industry declined 5.5c or 2.41% to $2.25; and Precinct decreased 1.5c to $1.245.

In the retail sector, KMD Brands was down 3c or 5.66% to 50c; Hallenstein Glasson eased 8c to $6.28; and The Warehouse increased 6c or 4.88% to $1.29.

Ebos Group was up 30c to $37.89; Port of Tauranga collected 7c to $5.71; a2 Milk gained 5c to $5.82; Mercury added 4c to $6.02; and The Warehouse Group improved 2c or 2.03% to $1.255.

Pacific Edge continued its charge, up 1c or 6.13% to 17.3c. Gentrack gained 20c or 1.86% to $10.95; Colonial Motor Co increased 35c or 5.26% to $7; Santana Minerals was up 7c or 3.06% to $2.36; Rakon improved 2c or 2.94% to 66c; and Restaurant Brands added 15c or 4.1% to $3.81.

Probiotic manufacturer Blis Technologies went into a trading halt after becoming aware of a patent filing that potentially has a significant impact on the company. Blis, which last traded at 2.1c, is assessing the impact including obtaining legal advice.

Rua Bioscience, unchanged at 4.6c, has secured $150,000 after placing new shares with key shareholders as part of a capital raise to meet short-term working capital requirements.

Tags: Market Close