NZ shares rise; F&P Healthcare helped by weak dollar, Ryman, Arvida fall

Friday 20th October 2017

New Zealand shares rose as Fisher & Paykel Healthcare led gains among companies that benefit from a weaker kiwi. Ryman Healthcare and Arvida Group led retirement village operators lower on concern the new government's policies may sap demand.

The S&P/NZX 50 Index rose 5.48 points, or 0.1 percent, to 8129.55. Within the index, 19 stocks rose, 25 fell and six were unchanged. Turnover was $221 million.

The market partly recovered after a broad selloff this morning in the wake of the announcement that New Zealand First and Labour will form the new government with support from the Greens. Among points of agreement is to reduce net migration, a move likely to take some pressure off a housing market that is already showing signs of having come off its peak.

F&P Healthcare, which gets much of its sales in foreign currencies such as the greenback, rose about 4 percent to $13.34 as the kiwi dollar dropped below 70 US cents. A2 Milk, which counts Australia as its biggest market, gained 1.5 percent to $7.99, which its production partner, Synlait Milk, rose 2.1 percent to $7.96. The kiwi fell to an 18-month low against the Aussie dollar.

"Exporters have benefitted from the New Zealand dollar falling," said Shane Solly, a director at Harbour Asset Management. Added to that "you may see some people globally using the weakness in the New Zealand dollar to buy into businesses that stack up well."

Ryman Healthcare fell 4.1 percent to $9.19, Arvida declined 3.3 percent to $1.18, Metlifecare dropped 2.5 percent to $5.88 and Summerset Group fell 2.4 percent to $4.96.

Solly said the reaction in the stock market to the new government "is pretty consistent with the policies that have been rolled out so far." Today's decline for the aged care sector amounted to "a small pullback" after a period of strong gains. "People are highlighting that residential activity may slow. The migration policy would take pressure off the property market."

More broadly, though, the outlook for retirement villages remains strong given "the really strong demographic band moving into retirement age," Solly said. Both the global and the domestic economy were still in reasonable shape and the New Zealand political environment was still moderate.

Westpac Banking Corp rose 2.6 percent to $37.69 and Australia & New Zealand Banking Group gained 1.9 percent to $34.35. Ebos Group, which counts Australia as its largest market, gained 2.3 percent to $17.90. Among companies whose fortunes are tied to global trade and the benefits of a weak dollar, Port of Tauranga rose 0.2 percent to $4.47 and Mainfreight gained 0.4 percent to $25.55.

Chorus rose 1.5 percent to $4 and New Zealand Refining gained 1.2 percent to $2.53. Contact Energy rose 1.8 percent to $5.65, with 6.3 million shares changing hands.

SkyCity Entertainment Group rose 0.3 percent to $3.82 after hinting that it may seek a partner for any further developments at its struggling Darwin resort.

Sky Network Television fell 4.3 percent to $2.67, Freightways fell 2.4 percent to $7.43 and Spark New Zealand declined 1.9 percent to $3.69. Air New Zealand fell 1 percent to $3.40.

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