A2 Milk pulls market higher
The sharemarket turned positive in the last hour of trading after The a2 Milk Company jumped following a report that the specialty milk marketer may soon get approval to sell its baby formula in the United States.
The benchmark S&P/NZX 50 Index closed up 0.06%, or 6.595 points, to 11,532.46 yesterday. On the broader market, 63 stocks rose and 72 fell, with $84 million in shares traded.
Shares in a2 Milk surged 8.6% to $5.42 before being placed in a trading halt, after the Australian Financial Review said the company may get approval as soon as this week on its application to sell baby formula in the US, where authorities have relaxed import rules as they seek to fill a shortage.
A2 lodged its application with the US Food and Drug Administration (FDA) under an enforcement discretion policy in May, as a baby formula crisis enveloped the nation following a contamination scare at a large plant. A2 already sells fresh milk in the US.
Gaining access to the world’s second-biggest infant formula market would be ‘‘massive’’ for a2 Milk, said Craigs Investment Partners investment adviser
Peter McIntyre. ‘‘It’s a market they have always tried to crack. This would be hugely exciting for them. It’s definitely a market that they’ve wanted greater exposure to, and this is going to give it to them.’’
In a statement after the market closed, a2 Milk managing director David Bortolussi said that while the company had been informed by the FDA that its application was under active review, at this stage there was no certainty as to the outcome of the application or the timing of any approval.
A2 Milk has been hard hit during the Covid-19 pandemic as it struggled to get its products into China, the world’s largest infant formula market and the company’s dominant market.
However, some analysts, such as Australia’s Bell Potter, have been forecasting an improved performance for the company in the second half of this year.
McIntyre said the late jump in a2 Milk shares meant New Zealand’s sharemarket outperformed others in Asia.
Asian shares were mostly lower amid concerns about regional stability as an expected visit by US House Speaker Nancy Pelosi to Taiwan prompted threats from Beijing. Benchmarks headed downward across the board in the region in early trading, including Japan, China, South Korea and Australia.
China sees Taiwan as its own territory, and has repeatedly warned of ‘‘serious consequences’’ if the reported trip to the island democracy goes ahead. Pelosi has said she is visiting Singapore, Malaysia, South
Korea and Japan for talks on a variety of topics, including trade, Covid-19, climate change and security.
In Australia, the central bank increased the benchmark interest rate by 50 basis points to 1.85%, as expected.
Plexure Group was the biggest gainer on the local market for a second day, closing up 26% to 41c after the software developer said its largest customer, burger chain McDonald’s Corp, had renewed its contract for five years for its digital customer engagement platform.
The firm’s technology powers digital loyalty, personalisation, ordering and payment via the McDonald’s mobile app for customers across 66 markets, including major markets such as Italy and Japan.
Infratil slipped 2.1% to $8.75 as some investors sold the stock for a profit following a jump higher. The stock touched a record $9.06 on Monday after the infrastructure investor announced a big gain in the value of its US renewable energy investment Longroad Energy.
Pacific Edge rebounded 11% to 54c. Its shares slumped 38% on Monday after the bladder cancer diagnostics company warned that a major US insurer might stop providing reimbursement coverage for its Cxbladder tests. McIntyre said investors and analysts were trying to ‘‘recalibrate’’ where the company’s shares should be trading following the news.
While losing the insurance coverage would be a big knock for the firm, it appeared confident that it could appeal the proposed changes, he said.