Thursday 5th September 2019
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The S&P/NZX 50 Index cracked another milestone, climbing above 11,000 for the first time, as export-based software firms Vista Group International and Pushpay Holdings got a boost from a weaker currency.
The benchmark index rose 54.21 points, or 0.5 percent, to 11,008.13. Within the index, 31 stocks increased, 13 fell, and six were unchanged. Turnover was $140.3 million.
New Zealand's stock market outperformed most other markets after weaker than expected US manufacturing data stoked fears of a recession in the world's biggest economy. The NZX50's relatively high average dividend yield remains a strong drawcard for investors struggling to find reliable income in fixed interest assets. At the same time, a kiwi dollar trading near a four-year low is boosting the outlook for exporters.
"There's no shortage of negative sentiment but the NZX50 is up, bucking the trend," said Mark Lister, head of private wealth research at Craigs Investment Partners.
Software companies Pushpay and Vista led the market higher, both bouncing back from recent sell-offs. Vista rose 6.8 percent to $4.06 on a volume of 2 million shares, well up on its 90-day average of 439,000. Pushpay advanced 5.5 percent to $3.26 with 728,000 shares changing hands, more than its 674,000 average.
Lister said both companies have been under pressure, with Vista punished over its downgraded growth outlook and Pushpay underperforming the past month. The kiwi dollar dropped below 63 US cents earlier this week, benefitting both companies which generate revenue in US dollars.
"There might be a bit of bargain-hunting in there given the expensive market backdrop," Lister added.
Ebos Group, which is increasingly exposed to the Australian economy, rose 2.4 percent to $23.76. Meanwhile, Sky Network Television fell 0.9 percent to $1.11 on a volume of 1.5 million shares. The pay-TV operator is an importer and has to pay more for programming rights when the currency is weak.
Companies paying reliable dividends remain in demand as investors weigh up the additional risk of buying defensive stocks against the minimal returns available after inflation on term deposits and corporate bonds.
Port of Tauranga advanced 1.5 percent to $6.60, Vital Healthcare Property Trust was up 1.5 percent at $2.67, Genesis Energy increased 1.3 percent to $3.545 on a volume of 1.5 million shares and Meridian Energy rose 0.9 percent to $5.80 on a volume of 1.6 million shares.
Trustpower's 2021 bond paying annual interest of 5.63 percent was the most traded debt security on a volume of 362,000. The notes closed at an unchanged yield of 2.35 percent. Trustpower shares increased 0.4 percent to $7.83, reflecting a dividend yield of 4.39 percent, according to Refinitiv data.
Spark New Zealand was the most traded stock on a volume of 2.8 million shares, less than its 3.3 million average. It rose 1.8 percent to $4.54. Spark's Qrious big data unit agreed to buy NOW Consulting for an undisclosed sum to accelerate its growth plans.
Arvida Group rose 1.4 percent to $1.39 on an unusually large volume of 2.1 million shares and Air New Zealand was up 0.7 percent at $2.93 on a volume of 1.7 million.
Of other stocks trading on volumes of more than a million shares, Fletcher Building rose 1.8 percent to $4.60, Kiwi Property Group increased 0.6 percent to $1.64, SkyCity Entertainment Group was unchanged at $3.85, Contact Energy fell 1.2 percent to $8.94, and Auckland International Airport was up 0.3 percent at $9.71.
Synlait Milk posted the day's biggest decline, down 2.8 percent at $9.12 on a volume of 91,000 shares, in line with its 94,000 average. Fonterra Shareholders' Fund units were down 1.2 percent at $3.26. Fonterra Cooperative Group today affirmed its current forecast payout for the 2020 season. It will report its annual result next week, having flagged a loss of up to $675 million due to a series of impairment charges to its global businesses, including New Zealand.
A2 Milk was up 0.8 percent at $14.72.
Goodman Property Trust decreased 0.2 percent, or 0.5 of a cent, to $2.175. The property investor shed rights to a dividend of 1.66 cents per unit.
NZX was unchanged at $1.27. Its monthly metrics showed the value of trading growth continued to lag behind the increased volume of transactions in August. On-market trading accounted for 52.5 percent of the total value last month. The average daily turnover was $159 million in August.
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