US-China woes take shine off index rise

Prospect of Infratil’s possible sale of Tilt helps to lift prices

Renewed concerns about United States-China relations took the shine off what had been a buoyant New Zealand sharemarket, the S&P/NZX50 index ending with a slight gain on light volume.

It closed 24.64 points, or 0.2 per cent, up at 12,656.02 on turnover of 55 million shares, worth $199 million.

The prospect of a possible sale by Infratil of its controlling stake in Tilt Renewables helped drive the index to a session high of 12,745.83 before growing fears about international trade curbed investors’ enthusiasm.

“The market has had a very long run and people are just a bit wary about another blowout in Sino-US relations,” Harbour Asset Management portfolio manager Shane Solly said. “On the other side, people are just watching what is happening with Covid-19 vaccines and what that means for portfolios going into the New Year,” he said.

“People are thinking, before the liquidity stops in a week or two, about how they want to position themselves.” Despite the trade tensions, data out yesterday showed China’s exports rose at the fastest pace since February 2018 in November, helped by strong global demand. Exports that month rose 21.1 per cent from a year earlier, Customs data showed.

News of Infratil’s plan to review its stake in NZX-listed wind farm company Tilt drove both stocks sharply higher — Tilt finished at $4.55, up 63c or 16 per cent, while and Infratil firmed 14c (2.4 per cent) at $5.94.

At that price Infratil’s 65.5 per cent stake would be worth $1.12 billion.

Solly said a sale would allow Infratil, which in June raised $300m through a placement and share purchase plan, to plough more money into its CDC data centre and Vodafone investments.

Infratil said it had recently had several inquiries about its Tilt shareholding amid strong demand for highquality renewables platforms globally. The review is scheduled to be concluded within six months.

Mercury Energy, which has a 20 per cent stake in Tilt, gained 7c to close at $6.47. The gentailer said there was no arrangement between itself and Infratil in relation to the review.

Solly said a theme of rotation was playing its way out as post-Covid optimism grew.

“New Zealand has been a relative Covid-19 winner — our defensive stocks and growth stocks have held up reasonably well,” Solly said.

Now it was a matter or investors rotating out of those “winning” stocks into the those that fared poorly during the crisis, such as Auckland Airport, which rose 27c to $7.91.

Among the defensive stocks, Contact Energy fell 15c to close at $7.87, while one of the market’s big growth stocks, a2 Milk, dropped 12c to $14.06.

Solly said Sydney-based a2 Milk could also be feeling the pressure of concerns about worsening relations between Canberra and Beijing.

Dairy company Synlait finished 15c higher at $5.46 after several board members said they’d lifted their individual holdings through the recent share purchase plan, at $5.10 a share, helping to buoy investor confidence.

Amid uncertainty on the world after Covid, Fisher & Paykel Healthcare finished down 35c at $31.95.