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MARKET CLOSE: NZ shares rebound; Kathmandu rises after bookbuild

Monday 7th October 2019

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(Oct. 4, 5:59 PM) New Zealand shares rose after two days of decline, amid a volatile international market. Outdoor retailer Kathmandu helped move the market higher. 

The S&P/NZX50 50 Index increased 71.61 points, or 0.7 percent, to 10,892.82. Within the index, 33 stocks rose, 13 fell, and four were unchanged.

“October is usually a volatile month for investors and the New Zealand market has performed well in relation to its Asian counterparts today," said Peter McIntyre, a senior advisor at Craigs Investment Partners.  "But that volatility is expected to remain in the coming week as their wall of worry that’s appeared will continue.” 

Overnight leads were moderate with the S&P 500 up less than 1 percent. New Zealand traded well above the rest of Asia and Australia which is "just in the green," McIntyre added. 

Equity markets slumped earlier in the week after weaker-than-expected US manufacturing and services data suggested growth in the world's largest economy may be slowing.

Next week, US earnings season would likely give better indications to the market how the ongoing war with China is impacting companies, McIntyre added. 

Shares in Kathmandu were up by 1.6 percent to $3.10, on a volume of more than 1.2 million shares, as the outdoor clothing retailer completed a bookbuild to fund the purchase of Australian brand Rip Curl. Kathmandu will raise $145 million in the offer, having offered shares at $2.55 a piece. The transaction is yet to get shareholder approval. 

Its largest single shareholder Briscoe Group didn’t take up all its rights in the offer, and shares in that company were down a touch by 0.8 percent to $3.57 on light volume. The move dilutes Briscoes’ shareholding in the retailer from 20 percent to 16 percent. 

Spark was the volume leader today, as 3 million shares traded hands. It was up 1.3 percent to $4.56, as the company continues to draw headlines from its coverage of the Rugby World Cup. 

“Some of the gremlins have been sorted out and most consumers are relatively satisfied with the rugby coverage and they have quite a strong balance sheet so are seen as a major threat to Sky TV,” McIntyre said. 

The second most traded stock was Infratil. It rose 0.8 percent to $4.94 on a volume of 2.2 million shares. 

“It is a long-term asset holder which responds well to low-interest rates,” McIntyre pointed out. Eleven stocks in total traded on more than a million shares today. 

Fonterra Shareholders' Fund units were up 3.3 percent to $3.78. They have gained about 18 percent since the company last week reported its second-ever loss and a strategic repositioning of the business.

“It continues to gather support on its refocus to consolidate earnings and its business after significant write-downs, so they are supported and it might be a value play,” McIntyre noted. 

Shares in A2 Milk were down by 0.8 percent at $13.06. Its supplier Synlait Milk was down by 0.1 percent to $9.06. All three firms are heavily reliant on sales into China, New Zealand's largest trading partner.

“The China-US trade war has impacted A2 and also when they last reported they had good earnings but marketing costs had moved up quite markedly,” McIntyre said.




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