Sharechat Logo

MARKET CLOSE: NZ shares down, Westpac and A2 drop while NZ Refining gains on throughput margins

Wednesday 18th January 2017

Text too small?

New Zealand shares fell, with volumes still low. Westpac Banking Corp, A2 Milk Co and Tegel Group Holdings all dropped though New Zealand Refining Co gained.

The S&P/NZX 50 Index dipped 3.7 points, or 0.1 percent, to 7,059.28. Within the index, 26 stocks fell, 17 rose and seven were unchanged. Turnover was $103.3 million.

"There were some mildly negative leads overnight, mainly from Europe," said James Smalley, a director at stockbroker Hamilton Hindin Greene. "Asia's pretty mixed, it's down but not massive amounts. It's pretty quiet volumes-wise at the moment, even the stocks that have fallen the most have pretty low volumes."

At 5:10 pm, New Zealand time, Australia's S&P/ASX 200 was down 0.6 percent, Japan's Nikkei 400 had fallen 0.2 percent and Hong Kong's Hang Seng was up 1.1 percent. 

Westpac Banking Corp led the index lower, down 1.8 percent to $33.80, while Tegel Group Holdings fell 1.5 percent to $1.36. The poultry producer listed at $1.55 in May last year. 

A2 Milk Co dropped 1.7 percent to $2.27. "It was bouncing back after some selldowns on news from associated businesses, it was getting quite a lot of media talk with Bellamy's," Smalley said. "They closed at $2.08 about a week and a half ago, had quite a good bounce on the 11th so it may just be a few bargain hunters coming in, that rally seems to have petered off today," 

New Zealand Refining Co was the best performer, up 1.9 percent to $2.75. The oil refinery operator said its annual throughput hit record levels in 2016 and its fee income for the year was the third largest earned by the company in the past 10 years. 

"It's a very good announcement, particularly on margins," Smalley said. "The increased demand for refining capacity will lead to higher margins - if there's a lot of slack refining capacity your margins are lower. That's what flows through to NZ Refining, they've had a very good November-December, and that's led to it being the best performer today. It is a company whose fortunes live and die by those margins, sometimes the south-east Asian refining market can get bounced around but they've obviously had a good couple of months."

Air New Zealand rose 1.6 percent to $2.24, Ryman Healthcare gained 1.5 percent to $8.40, and Chorus rose 1.2 percent to $4.11.

Xero fell 1 percent to $18.32. The cloud-based accounting software company says it is still considering whether chairman Chris Liddell's position is compatible with his new role as a White House adviser in the Trump administration and will update the market when a decision is made.

Units in Fonterra Shareholders Fund gained 0.6 percent to $6.25, their highest level since November 2014. Dairy product prices inched higher at the Global Dairy Trade auction overnight, stemming two consecutive declines. Whole milk powder slipped 0.1 percent, while rennet casein increased 4.9 percent and butter rose 1.6 percent.

"Higher [milk] prices are not good for it, what is better is the secondary products - cheese, butter, casein. Maybe investors are thinking milk powder is relatively flat but prices for those secondary products are improving," Smalley said.

Infratil gained 0.5 percent to $2.91, a three-month high. "It's bounced about 11.5 percent since December when it hit almost 2 and a half year lows," Smalley said. "There may be a bit of bargain hunting there, a lot of its investments are doing pretty well - it's got some solid businesses generating some significant cashflows. That selldown came after they made an investment into renewable energy in the States, probably not a great time given who won the US election and his theory on climate change."

Outside the main index, Pushpay dropped 4.7 percent to $1.62. The shares dropped sharply in December, triggering a price enquiry from stockmarket operator NZX, but recovered in early January before the company gave a third-quarter trading update last Wednesday.

"It's one of those stocks you've got to be quite patient with. You've had the selldown, the bounce back, and maybe what we've seen is some of the luckier investors who did buy down around those $1.30, $1.40 levels, they've been exiting at $1.80 and that's what pushing the stock down to where it is now," Smalley said. "It's going to live and die by its cashflows, movements like this aren't linked too closely to the underlying business - the share price is still suffering the after effects of that big selldown."

 

BusinessDesk.co.nz

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

ATO chases HT&E for more than A$100M over licensing of former NZ mastheads
Auckland Council puts feelers out for construction syndicate capable of $300M+ waterfront build
NZ guest nights rise in November as Australian visitors fill accommodation
Government reconvenes pay equity group, legislation due mid-2018
NZ services sector activity outshines manufacturing in December slowdown
Spark appoints Grant McBeath as interim CEO for home, mobile division
Z Energy cuts annual earnings guidance on rising crude oil prices, supply disruptions
January 23rd Morning Report
NZ dollar gains as US Senate cuts deal to end govt shutdown, stoking risk appetite
CORRECT: Christchurch City Council to get update on Havelock North inquiry response

IRG See IRG research reports