MARKET CLOSE: New Zealand shares follow Australian shares higher, up 4.6% in 2018

Monday 31st December 2018

The New Zealand share market ended 2018 on a firm note, lifted from earlier doldrums by a positive start to trading across the Ditch and with the dual-listed shares in A2 Milk leading the market higher.

The S&P/NZX 50 Index rose 27.78 points, or 0.3 percent, to 8,811.27. That took its gain for 2018 to 4.6 percent. Within the index, 28 stocks gained, 12 fell and 10 were unchanged. Turnover was a modest $48.6 million.

The S&P/ASX 200 Index was 0.7 percent higher shortly after the NZX closed for the year.

“That’s turned the market rather nicely,” says Grant Williamson at Hamilton Hindin Greene.

“Some of the leading stocks have been coming in for a bit of buying but volume’s pretty light.” Book squaring ahead of year end probably inspired much of the activity.

The 4.6 percent annual gain in the NZX50 made it one of the world’s best performers. The S&P 500 Index in the United States, for example, was down 7 percent year-to-date when trading ended on Friday.

“The New Zealand market has been an absolute stunner,” said Shane Solly, an equities portfolio manager at Harbour Asset Management.

While volatility has picked up in the last few months, “you’ve got to remember we’ve just come through five years of very low volatility. Volatility is normal,” Solly said.

Today, A2 Milk gained 19 cents, or 1.7 percent, to $11.15, while Fletcher Building lifted off its lows to end the session unchanged at $4.88. Spark shares shed 2 cents to $4.15.

But for the year, A2 Milk and Fletcher Building were at opposite ends of the spectrum, A2 being the second largest gainer within the main index, ending the year 35.8 percent higher, while Fletcher was the second-worst performer, shedding nearly 33 percent.

A2 Milk’s strength belies how volatile the stock has been, trading ranging from as low as $7.66 to as high as $14.62 through the year.

“A2’s always been a volatile business and it’s taken a long time to get to where it is,” Solly says. “The thing that’s changing is that they’re building a wider range of business streams which may reduce some of that volatility.”

A2 Milk first built a solid platform by selling fresh milk in Australia and gaining a near 10 percent share by value and used that platform to launch its Platinum infant formula, which has become a major brand in both Australia where it is now the leading infant formula brand and in China where it claims a 5.6 percent market share.

More recently it has launched into fresh milk in the US.

Trading in Fletcher Building’s shares has been more one-way traffic downwards over the last couple of years but it did end this year on a positive note when it announced the $1.2 billion sale of Formica, something it had promised to do back in April within 18 months.

“They did what they said they were going to do. That’s an important signal in itself – they’ve actually executed on something,” Solly said.

(BusinessDesk)

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