NZ market ends year on a high
A2 Milk, Fletcher Building at opposite ends of the index spectrum in 2018
The New Zealand sharemarket ended 2018 on a firm note, lifted from earlier doldrums by a positive start to trading across the Tasman and with the dual-listed shares in a2 Milk leading the market higher.
The S&P/NZX50 Index rose 27.78 points, or 0.3 per cent, to 8811.27. That took its gain for 2018 to 4.6 per cent. Within the index, 28 stocks gained, 12 fell and 10 were unchanged. Turnover was a modest $48.6 million.
The S&P/ASX200 Index was 0.7 per cent higher shortly after the NZX closed for the year.
“That’s turned the market rather nicely,” says Grant Williamson at Hamilton Hindin Greene.
“Some of the leading stocks have been coming in for a bit of buying but volume’s pretty light.”
The 4.6 per cent annual gain in the NZX50 made it one of the world’s best performers. The S&P 500 Index in the United States, for example, was down 7 per cent year-to-date when trading ended on Friday.
“The New Zealand market has been an absolute stunner,” said Shane Solly, an equities portfolio manager at Harbour Asset Management.
While volatility has picked up in the last few months, “you’ve got to remember we’ve just come through five years of very low volatility. Volatility is normal”, Solly said.
Yesterday, a2 Milk gained 19 cents, or 1.7 per cent, to $11.15, while Fletcher
Building lifted off its lows to end the session unchanged at $4.88. Spark shares shed 2 cents to $4.15.
But for the year, a2 Milk and Fletcher Building were at opposite ends of the spectrum. A2 was the second largest gainer within the main index, ending the year 35.8 per cent higher, while Fletcher was the second worst performer, shedding nearly 33 per cent.
A2 Milk’s strength belies how volatile the stock has been, trading ranging from as low as $7.66 to as high
as $14.62 through the year.
“A2’s always been a volatile business and it’s taken a long time to get to where it is,” Solly says.
“The thing that’s changing is that they’re building a wider range of business streams which may reduce some of that volatility.”
A2 Milk first built a solid platform by selling fresh milk in Australia and gaining a near 10 per cent share by value and used that platform to launch its Platinum infant formula, which has become a major brand in both Australia where it is now the leading infant formula brand and in
China where it claims a 5.6 per cent market share. More recently it has launched into fresh milk in the US.
Trading in Fletcher Building’s shares has been more one-way traffic downwards over the last couple of years but it did end 2018 on a positive note when it announced the $1.2 billion sale of Formica, something it had promised to do back in April within 18 months.
“They did what they said they were going to do. That’s an important signal in itself — they’ve actually executed on something,” Solly said.