Index flat after Tiwai update
Energy stock prices remained muted after the announcement that the Tiwai Point aluminium smelter will remain open for at least another two years as investors pondered the impact of earnings and dividend yields on the affected companies.
Shane Solly, portfolio manager with Harbour Asset Management, said Contact and Meridian no doubt provided electricity pricing discounts for the smelter’s owner Rio Tinto to remain operating through to December 2024.
“It is great news we have certainty, but the announcement is not a surprise and there are costs associated with it that may affect earnings. It does, however, provide time to put the infrastructure in place and get the electricity out of Southland.
“If Contact and Meridian had not had such a strong run lately with the exchange-traded funds buying, then we may have seen a more positive response to the smelter development,” Solly said. “But we do have a bit of water to run through the dam and see what it means on earnings and dividend.”
The S&P/NZX 50 Index finished flat at 13,115.87, down 4.40 points or 0.03 per cent, after a choppy day’s trading, underpinned by the uncertainty in the direction of the energy stocks.
A total of 69.78 million shares worth $152.12 million were traded, and there were 86 gainers and 57 decliners over the whole market.
Meridian fluctuated between a high of $8.145 and a low of $7.83 during the day before closing up 4.5c to $7.94 on heavy trading of $20.7m worth of shares.
Contact ranged between $10 and $9.57 before settling at $9.69, down 26c or 2.61 per cent on trade worth $18.3m. Mercury fell 20c or 2.74 per cent to $7.110, and Genesis Energy — the least affected by the Tiwai Point development — rose 4c to $3.74. Vector was also up 5c to $4.28.
Late in the day news filtered through that President-elect Joe Biden is planning to increase the economic stimulus package to US$2 trillion ($2.8t). Latest statistics in the United States showed inflation, at 1.4 per cent, was not running as high as expected, and 10-year government bond yields had stabilised, falling from 1.15 per cent to 1.11 per cent.
Fisher & Paykel Healthcare made good progress, rising 35c to $32.20 on trade worth $13.34m.
Auckland International Airport was up 13c or 1.72 per cent to $7.68; Serko increased 8c to $5.68; and Hallenstein Glasson continued climbing, gaining 38c or 5.48 per cent to $7.31.
Online employment solutions provider PaySauce reported that revenue for the third quarter of its 2021 financial year grew 44 per cent to $569,000 compared with the previous corresponding period, and it added more than 300 new clients, a 6 per cent gain. Its share price remained flat at 30c.