Market commentary
WELLINGTON: The highflying energy stocks were mauled by profittaking as the New Zealand sharemarket suffered its heaviest fall in four months.
The S&P/NZX 50 Index slumped 268.10 points or 1.98% to 13,290.09. The index beat the previous biggest drop of 1.91% on September 4 when it closed at 11,824.31.
There were 68 gainers and 79 decliners over the whole market on steady volume of 110.2 million shares worth $159.93 Meridian shed 72c or 7.88% to $8.42; Contact Energy was down 71c or 6.6% to $10.04; Mercury lost 30.5 or 4.13% to $7.08; Genesis declined 11c or 2.83% to $3.78; and Trustpower fell 14c to $8.56. Vector was the only energy company to rise, gaining 3c to $4.29.
Jeremy Sullivan, investment adviser with Hamilton Hindin and Greene, said the price earnings ratios of Contact and Meridian were more inflated than warranted and those stocks were probably due a correction.
‘‘The New Zealand institutional investors came back from their break, saw how far Contact and Meridian had risen and thought ‘geez, they look overpriced — I wouldn’t mind taking some profit on that’.’’
The United States markets were closed overnight and the clean energy exchange traded funds (etfs), which have pushed Contact and Meridian’s prices skywards, were absent from the day’s trading.
Mr Sullivan said it showed the influence of passive investing on the local market.
‘‘It used to make up 2030% of the trading; now it’s 70%. The BlackRock ETF holds 9% of Contact and Meridian, and today there were 2.6 million Meridian shares traded compared with 8 million on Friday.’’
Other stocks which have had strong runs lately were also the centre of attention for profittakers. Chorus fell 22.5c or 2.8% to $7.825; Freightways declined 20c or 1.9% to $10.30; Infratil shed 16c or 2.14% to $7.32; Seeka lost 7c to $4.80; and electronics manufacturer Rakon was down 8c or 10.39% to 69c.
Fisher and Paykel Healthcare fell 45c to $32.10; a2 Milk slipped 26c or 2.23% to $11.41; Mainfreight was down 22c to $68.50; SkyCity Entertainment declined 6c or 1.89% to $3.12; and online travel provider Serko decreased 15c or 2.54% to $5.75.
Medical products company Ebos Group went against the flow, rising 60c or 2.09% to $29.30. Sullivan said Ebos was a good business and healthcare was still in demand.
Another unassuming but established company, Skellerup Holdings headed steadily for $4 after gaining 2c to $3.82. Tourism Holdings, hit hard by the Covid19 pandemic, rose 3c to $2.50.
Summerset Group Holdings fell 8c to $12.56 after reporting record quarter sales for the three months ending December. The group completed 176 new unit sales and 120 resales, and it has presold 93% of Napier Te Awa’s villas to be delivered in the present quarter.
Fellow retirement village operator Ryman Healthcare also joined the decliners, falling 10c to $15.50.
After providing a halfyear earnings upgrade on Friday, The Warehouse Group gained more ground, rising 18c or 6.43% to $2.98. Cervical screening firm TruScreen was the day’s biggest mover, rising 2.6c or 17.33% to 17.6c. —