Shares rise as investors seek out safe havens

New Zealand shares rose as the local economy’s relatively strong recovery from the Covid-19 lockdown attracted investors keen to limit their exposure to the likes of Australia and the US, where the virus is spreading once more.

The S&P/NZX 50 index rose 78.99 points, or 0.7 per cent, to 11,584.05. Within the index, 24 stocks rose, 19 fell and seven were unchanged. Turnover was $150.2 million.

Property stocks were among the stronger performers as investors sought the relative safety of tangible assets and reliable cash flow as new infections in the US reached a daily record.

Australia’s S&P/ASX 200 index started the day stronger, but quickly turned negative once the state of Victoria announced a record 428 new Covid-19 cases. The ASX 200 was flat in late trading.

The local market was one of the best performers across Asia, with global investors encouraged by NZ’s virus-free status, and manufacturing data showing a lift in activity.

“We are seeing modest net inflows pushing the market up with investors favouring the businesses they have more confidence in through a potentially tougher run with Covid,” said Shane Solly, a portfolio manager at Harbour Asset Management.

Property for Industry — which counts manufacturers as tenants — was among market leaders on the day, rising 4.1 per cent to $2.54. Solly said the strong June manufacturing index performance was an important indicator for the domestic economy which was supporting some sectors.

“Certainly, the property stocks do benefit from that improved activity,” he said.

Kiwi Property Group was the only decliner in the sector, dropping 1.5 per cent to $1.02.

Restaurant Brands New Zealand led the market higher, gaining 6.4 per cent at $12.09. Fonterra Shareholders’ Fund units fell 0.3 per cent to $3.88. The dairy exporter upgraded its 2020/21 milk price by 4 per cent to a midpoint of $6.40, thanks to recovering consumer appetite in China.

Milk rose 2.2 per cent to $20.70, likely buoyed by the improved demand from its key market. Its main supplier, Synlait Milk, fell 1 per cent to $7.09.

Meridian Energy rose 2 per cent to $4.69 as it continued to recover from last week’s drop on Rio Tinto’s decision to close the Tiwai Point aluminium smelter next year. Contact Energy also gained, up 0.4 per cent at $5.77.

While defensive stocks proved attractive, investors took a risk-off approach to virussensitive companies as the excitement from the vaccine update wore off.

Vista Group International dropped 4.5 per cent to $1.28, the day’s biggest decline.