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MARKET CLOSE: NZ stocks gain on A2 broker upgrade

Thursday 11th July 2019

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New Zealand stocks gained as a strong lift in A2 Milk after a broker upgrade helped propel the index higher. 

The S&P/NZX 50 Index increased 112.03 points, or 1.06 percent, to 10,650.14. Within the index, 29 stocks gained, 15 fell, and six were unchanged. Turnover was $101.9 million.

Nigel Scott, a director at Craigs Investment Partners, said the main stories of the day are A2 Milk, New Zealand Oil and Gas and Ryman Healthcare.

A2 Milk was up 6.6 percent at $16.25 and was the market's biggest gainer. Just over 1.2 million shares changed hands.

Scott said the strong buying in A2 looks to be because “UBS have gone from neutral to a buy on A2 and now has a $17.50 target price,” up 25 percent from their prior forecast. Investors will now be awaiting the company’s annual result in August.

Synlait Milk, which supplies A2, rose 0.9 percent to $9.02.

Scott said that overall volumes were light, largely due to the two-week school holiday period currently underway and the fact that most analysts will have opted to take holidays ahead of the August reporting season.

“There’s a two-week patch where you either find some snow or some sun. It’s a genuine holiday period,” he said.

Only four other stocks traded on volumes of more than a million shares. Meridian Energy rose 1 percent to $4.86 and Precinct Properties NZ fell 1.1 percent to $1.735. Pushpay Holdings fell 2 percent to $2.08 and Spark New Zealand fell 1 percent to $3.94.

Ryman Healthcare rose 2.2 percent to $12.63. While there was no specific news driving the stock, Scott said it continues to be sought after for its yield and said it looks to have garnered recent interest from European buyers.

Vital Healthcare rose 2.8 percent to $2.59 after saying its property portfolio increased by 5.9 percent, or $102.4 million, for the year ended June 30, reflecting two recently completed projects in Australia.

Restaurant Brands rose as much as 0.6 percent to $9.48 after the fast-food operator said it is expecting profit growth of at least 6 percent this year as the firm benefits from new store openings. It closed unchanged at $9.42. 

Outside the main index, New Zealand Oil and Gas added 23 percent to 61 cents after OG Oil & Gas offered a 25 percent premium to buy out minority holders in the Wellington-based explorer. Singapore-based OGOG, the oil and gas arm of Ofer Global Group and 70 percent-owner of NZOG, is offering 62 cents for the shares it doesn't already own.

PaySauce was unchanged at 1.1 cents. Earlier the company said it saw strong growth in the second quarter as the number of New Zealand workers receiving their pay through its software continued to climb.

Looking ahead, Scott said investors will be waiting for US Federal Reserve chair Jerome Powell’s semi-annual monetary policy report to the House Financial Services Committee on Wednesday in the US and then the Senate Banking Committee on Thursday.

Property and utility stocks, favoured for their reliable dividend flows, have weakened in recent days after strong jobs data in the US tempered expectations for a 50 basis-point rate cut there at the end of the month

Should Powell use the opportunity to stoke expectations for further US rate cuts, equity markets will get a lift which will set the tone for trading tomorrow, Scott said.


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