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MARKET CLOSE: NZ shares rise as Fletcher remains in MSCI index

Monday 11th November 2019

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(Nov. 8, 6:00 PM) New Zealand shares gained as Fletcher Building and Mercury NZ rose on the back of their inclusion in the MSCI New Zealand Index. 

The S&P/NZX50 50 Index rose by 81.92 points, or 0.8 percent, to 10876.98. Within the index, 24 stocks rose, 20 fell, and six were unchanged. Turnover was $216.5 million

“It's been a risk-on day with international markets being strong,” said Peter McIntyre, an investment adviser at Craigs Investment Partners. The Dow Jones Industrial Average rose 0.6 percent to 27,674.80 and other international markets followed suit. 

Fletcher Building drove the NZX50 higher, trading up 5.6 percent at $5.11. The shares have gained about 12 percent this week on strong volumes. More than 6.5 million shares changed hands, making it today’s volume leader. Some investors had expected Fletcher to be excluded from the MSCI index, which was reweighted today. Institutional investors tracking those indices then have to match their portfolios to the changes. 

“The general consensus was it was going to be excluded, but it was a relief rally today and it has traded with good volumes as well,” McIntyre said, noting the company was also buying back shares. 

Mercury was added to the global share index today, and traded up 3.1 percent at $4.92 as a result. 

Pushpay Holdings extended recent gains, rising 3.8 percent to $3.55 and taking this week's gain to more than 12 percent. Earlier this week it reported a US$6.5 million net profit for the six months ended September, a turnaround from the previous first-half's US$4.4 million net loss.

Vista Group International and Meridian Energy also made gains, with the cinema software firm’s price rising by 1.3 percent to $3.83, and the electricity company up 2.1 percent at $4.65. 

Ryman Healthcare led retirement village operators higher, up 2.6 percent at $13.59. Summerset Group rose by 2.2 percent to $6.86 while Oceania Healthcare was up by 1.9 percent at $1.05. 

“The retirement village operators are in strong demand, going higher off the back of a rebound in Auckland house prices,” McIntyre said. 

Demand for equities was being driven by funds being diverted from bonds into stocks, as well as a belief the US-China trade war would be resolved in the next month or so, McIntyre said.  

Trustpower posted the day's biggest/ fall, down 6 percent at $7.65 while A2 Milk fell by 1.4 percent to $12.39.

“There are concerns about increasing competition out of China and so investors are being cautious of that stock,” McIntyre said.  

Outside the main index, shares of New Zealand Oil and Gas declined by 9.7 percent to 65 cents as the company said 40 percent of the shares held by minority investors had been voted on its takeover deal as of last night. Of those 48.4 percent were against the transaction. The NZ Shareholders’ Association has said it will vote its proxies against the deal. 

Napier Port increased 0.3 percent to $3.38 after the company named Heron Construction and Dredging as its key subcontractor to start work on its new multipurpose 350 wharf known as 6 wharf. 

Looking ahead to next week, McIntyre said investors would focus on US earnings, and in the local market, Heartland Group Holdings and Contact Energy have annual meetings, while Infratil, Mainfreight, Sanford and Goodman Property results were due. 

“Mainfreight, we expect to remain robust, as it typically tends to be one stock which under-promises and over-delivers. But it will be good to see how the US-China trade war impacts its global operation.” 


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