NZ sharemarket rallies on increasing business confidence

A more positive New Zealand sharemarket posted a healthy gain as two surveys showed business confidence is returning on the prospect of another interest rate cut next week.

Tuesday, October 1st 2024, 6:32PM

by BusinessDesk

The S&P/NZX 50 Index traded strongly in the afternoon and closed at 12,466.69, up 42.87 points or 0.35% following two successive falls.

On another heavy trading day, there were 48.5 million share transactions worth $173.76m.

Sentiment rebounded 35 points to minus 5% in the NZ Institute of Economic Research (NZIER) third quarterly survey of business opinion. In ANZ’s latest survey business confidence rose 10 points to +61 in September and expected own activity increased eight points to +45.

NZIER said businesses are responding favourably to the withdrawal of monetary restriction, but times are still tough here and now. All the survey responses came after the Reserve Bank’s official cash rate cut in late August (by 25 basis points to 5.25%).

The institute said forward-looking measures (for the next three months) improved, albeit not to super-high levels. “We’d characterise this as cautious optimism that the worst is over.”

ANZ said business optimism continues to rise. There was a turn higher in the hardest-hit sectors of construction and retail and it was notable that late-month responses averaged minus nine, compared with minus 22 at the start of September.

Jeremy Sullivan, investment adviser with Hamilton Hindin Greene, said the market was pricing in a further cash rate cut when the Reserve Bank delivers its latest monetary policy statement next Wednesday.

“The question is whether it will be 25 or 50 basis points and there’s an 80% probability for 50 basis points.”

Market movers

Market leaders Fisher and Paykel Healthcare, up 24c to $34.99, Meridian Energy, gaining 7c to $6.01, Ebos Group, increasing 36c to $36.50, and Gentrack, rising 26c or 2.42% to $11, helped drive the market higher.

Hallenstein Glasson rose 31c or 4.84% to $6.71 following its strong annual result. The clothing retailer has opened two new stores in Australia and also two in the Auckland Manawa Bay centre at the international airport.

Fellow retailers KMD Brands increased 4.5c or 9.28% to 53c, and The Warehouse was up 2c to $1.19.

SkyCity was up 5c or 3.62% to $1.43; Sky TV increased 13 or 5.02% to $2.72; Ventia Services gained 21c or 4.32% to $5.07; Vulcan Steel collected 29c or 3.53% to $8.50; and Fletcher Building added 8c or 2.71% to $3.03.

Other gainers were Delegat Group up 14c or 2.59% to $5.54; Scales Corp increasing 15c or 4.29% to $3.65; and Rakon adding 4c or 6.15% to 69c.

Synlait gained 2c or 5.13% to 41c after confirming the issuance of $217.8m worth of new equity after a capital raise from Bright Dairy and a2 Milk and refinancing of its banking facilities.

Bright increased its stake in Synlait from 39.12% to a controlling 65.25%, and a2 Milk’s shareholding remained steady at 19.83%. A2 Milk's share price was down 12c to $6.73.

The change in shareholding control triggered an early redemption right for Synlait bondholders who will receive $1, plus accrued interest, for each bond on November 13.

Sullivan said not so long ago the bonds were trading at 50c and now the retail investors will be paid back in full because of the increased liquidity of Synlait.

Channel Infrastructure increased 11c or 6.47% to $1.81 after telling the market it has a conditional agreement with Australia-based Seadra Energy, which is partnering a consortium involving Qantas, Renova Inc, Ken Plc and ANZ to develop a biorefinery at Marsden Point near Whangārei.

Seadra was looking to buy decommissioned assets from the hydrocracking plant for US$33.875m (NZ53.49m) and finally decided to leave the assets at Marsden Point and use them for the proposed biorefinery.

“Having identified multiple markets for the biofuels produced, the economics for a domestic advanced biorefinery made the most sense for the consortium," Seadra said.

Marsden Maritime Holdings, which operates Northport at Marsden Point, gained 10c or 2.95% to $3.49.

The property sector was stronger. Argosy was up 2c or 1.9% to $1.07; Goodman Trust gained 3.5c to $2.09; and Investore added 2c to $1.18.

Vista Group, down 5c or 1.86% to $2.64, has received a request, from Admetus Capital, to call a special meeting of shareholders and vote on the removal of two existing directors including chair Susan Peterson. Admetus is seeking to have two of its own nominated directors on the board.

Other decliners were Mercury Energy shedding 23c or 3.57% to $6.22; Mainfreight down 86c to $70.50; Santana Minerals falling 20.5c or 8.1% to $2.325; Accordant Group decreasing 5c or 7.41% to 50c, and Promisia Healthcare falling 5.5% or 18.64% to 24c.

Tags: Market Close