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MARKET CLOSE: NZ shares join Asia rally on trade optimism; Fonterra loss dominates headlines

Thursday 13th September 2018

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New Zealand shares rose, joining a regional rally on optimism over US-China trade relations. Fonterra Cooperative Group's first annual loss dominated local headlines. 

The S&P/NZX 50 index gained 53.42 points, or 0.6 percent, to 9,248.99. Within the index, 30 stocks rose, 15 fell and five were unchanged. Turnover was $153.1 million. 

Stocks across Asia rose on reports US Treasury Secretary Steven Mnuchin extended an olive branch to his counterparts in China, inviting them to ministerial level trade talks.

Tensions between the world's two biggest economies increased volatility in financial markets as investors try to gauge the potential impact on global growth. Hong Kong's Hang Seng was up 1.5 percent in afternoon trading, while Japan's Topix rose 1.2 percent. China's Shanghai Composite Index increased 0.1 percent. 

Fonterra's annual result kept local investors busy. The cooperative posted a loss attributable to shareholders of $221 million with all business units struggling. The new leadership team is reviewing the entire business and have pledged to reduce debt levels by $800 million. The Fonterra Shareholders' Fund, which gives external investors exposure to the cooperative's earnings, rose 0.8 percent to $5.01. 

"A lot of the coverage has been fairly negative and it's a bit of a miss in terms of the forecast they were indicating," said Grant Davies, an investment adviser at Hamilton Hindin Greene. "Shareholders' Fund investors just go along for the ride - you've got no voting rights and you're really putting faith in your directors and the farm gate manual." 

He said A2 Milk Co and Synlait Milk have been cleaner investment opportunities for investors. Over the past year, Fonterra fund units have dropped 18 percent, whereas A2 shares have climbed 101 percent and Synlait are up 165 percent. A2 today slipped 0.3 percent today to $12.06, while Synlait rose 1.5 percent to $13.20. 

Contact Energy rose 0.4 percent to $5.73. Monthly operating stats showed the country’s second-largest power and gas retailer lost the most customers in one month for seven years, falling to 410,500. Davies said the power companies were still basking in a relatively benign government review paper, which found they didn't extract excessive profits. 

Mercury NZ slipped 0.2 percent to $3.285, Meridian Energy rose 1.6 percent to $3.28 and Genesis Energy fell 0.6 percent to $2.49. 

Trade Me led the market higher, up 3.8 percent to $5.17. Kathmandu Holdings rose 1.9 percent to $3.16 ahead of next week's annual result. Tourism Holdings posted the biggest fall, down 2.3 percent to $5.52. 

Among blue-chip companies, Fletcher Building rose 1.3 percent to $6.32, Port of Tauranga gained 1.2 percent to $5.13, Auckland International Airport increased 1 percent to $6.99 and Fisher & Paykel Healthcare advanced 1 percent to $15.25. Air New Zealand increased 0.2 percent to $3.165 and Spark New Zealand rose 0.4 percent to $4.035. 

Several companies shed rights to dividend payments today. Precinct Property New Zealand fell 2 cents to $1.44 after shedding rights to a 1.45 cents per share dividend. Metlifecare declined 3 cents to $6.29 after shedding rights to a 6.75cps dividend, and Freightways fell 8 cents to $7.80 after giving up rights to a 15.25cps dividend. Stride Property Group fell 1 cent to $1.95, shedding rights to a 2.2cps dividend. 

Outside the benchmark index, Methven fell 1 cent to $1.18 after shedding rights to a 4cps dividend, Seeka was unchanged at $6.10 giving up a 12cps dividend, and TIL Logistics slipped 2 cents to $1.66 after shedding a 2.3cps dividend. 


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