Market commentaries
AUCKLAND: New Zealand shares fell, led by a slump in Kathmandu Holdings after the retailer raised funds at a steep discount. Fears about the severity of the Covid19 outbreak in the United States also weighed on investor sentiment.
The S&P/NZX 50 Index dropped 55.52 points, or 0.6%, to 9870.56. Within the index, 31 stocks fell, 14 rose, and five were unchanged. Turnover was $157.2 million.
Kathmandu led the market lower as it slumped 27.7% to 81c. The retailer raised $154 million at 50c a share from institutional investors, and was seeking another $53 million from retail investors, although cornerstone shareholder Briscoe Group wasn’t participating. Its shares rose 3% to $2.75.
Kathmandu was told to raise the funds by its bankers to get a waiver on its lending covenants. Kathmandu’s stores are closed around the world while it waits out the lockdowns.
‘‘The fact that Briscoes isn’t taking part is telling. They have their own issues to deal with, but consumer discretionary spending is in for a rough ride, even when we do eventually come out of lockdown,’’ Fat Prophets head of research Greg Smith said.
‘‘The timing of buying Rip Curl now looks pretty bad in retrospect. There’s a lot of uncertainty, and consumers’ pockets are going to be fairly tight globally for some time yet.’’
Investors were also worried about the growing impact of the outbreak in the US. Overnight the Federal Government warned modelling showed between 100,000 and 240,000 people could die from the virus outbreak — even if federal guidelines on containing the virus were followed.
Michael McCarthy, a market analyst for CMC Markets, said the shift in rhetoric from US President Donald Trump pulled sentiment lower as some US investors had previously viewed the outbreak as being overhyped.
New Zealand’s Reserve Bank changed the conditions of local bank registrations prohibiting them from paying dividends through the Covid19 crisis.
‘‘This cut to dividends comes at a time when governments are striving to put cash in the hands of consumers and central banks have pumped the financial system to ensure financial markets’ liquidity and security,’’ Mr McCarthy said.
‘‘It is concerning for shareholders who rely on those dividends, but secondly it goes against everything else being done around the world to make sure economies survive the outbreak.’’
Banking stocks were all weaker yesterday. Australia and New Zealand Banking Group fell 5.4% to $16.64, Westpac Banking fell 3.4% to $16.68, and Heartland Group fell 5.1% to 93c.
Tourism Holdings dropped 10.6% to 93c as Covid19 anxiety flowed downstream from the US.
Kiwi Property Group declined 4.8% to 89c and Goodman Property Trust dropped 1.8% to $2.14.
Two of the biggest stocks on the index were also weaker, with Fisher & Paykel Healthcare down 1.5% at $30.50 and A2 Milk 1.3% lower at $17.08.
■ The Australian sharemarket closed lower amid increasingly dire warnings about how bad the Covid19 crisis could get in the US.
The S&P/ASX200 benchmark index finished down 104.3 points, or 1.98%, at 5154.3, while the All Ordinaries index dropped 102 points, or 1.93%, to 5188.7.
The Australian dollar is buying $US60.82c, up from $US60.80c as the market closed on Wednesday.