Market commentary
WELLINGTON: Leading energy stocks Contact and Meridian continued to plummet after finding themselves falling out of favour with the overseas exchange traded funds that bought them at high prices, and the New Zealand sharemarket was driven down more than 1%.
The S&P/NZX 50 Index closed an eventful week down 171.49 points, or 1.34%, to 12,589.64, falling to a level last seen in late November. The index retreated 3.6% this week on the back of the sliding energy stocks.
There were 57 gainers and 84 decliners on volume of 47.31 million shares worth $175.47 million. Contact and Meridian dominated the proceedings with $28.28 million and $21.9 million shares traded respectively.
Contact fell 39c or 5.14% to $7.20, and Meridian plunged 43.5c or 6.97% to $5.81, both stocks nearing their price levels of midOctober last year.
The iShares Global Clean Energy Exchange Traded Funds in the US and UK, which track the performance of the S&P Global Clean Energy Index, are reviewing their weightings and liquidity, and adding new companies. This means their exposure to Contract and Meridian will be reduced, and now Mercury seems unlikely to join the global index.
Salt Funds Management managing director Matt Goodson said the index changes would take place in April but people were obviously prepositioning themselves.
‘‘It’s the madness of passive investment funds. They were forced to buy Contact at more than $10 and Meridian more than $9, and now they are forced sellers in the $7 and $6 regions. God bless them,’’ he said.
The other energy stocks caught the backflow of Contact and Meridian’s movements. Mercury fell 29c or 4.09% to $6.80; Genesis was down 9.5c or 2.44% to $3.805; Trustpower shed 27c or 3.03% to $8.65; and Vector lost 6c to $4.15.
Other blue chips to fall were: Ebos Group down 10c to $29.70; Auckland International Airport declining 19c or 2.68% to $6.925; a2 Milk decreasing 13c to $10.66; Ryman Healthcare losing 30c or 2.01% to $14.65; Freightways shedding 13c to $10.95; and Summerset Group Holdings down 18c to $12.97.
Bucking the trend were Fisher and Paykel Healthcare, up 11c to $32.25; Skellerup Holdings increasing 4c to $4.04; and Port of Tauranga gaining 3c to $7.28.
Air New Zealand has been assured by Finance Minister Grant Robertson the Crown will participate in its equity capital to maintain the majority shareholding (at present at 51.9%). Air New Zealand’s raising, expected to be up to $1 billion, will take place before June 30. Its share price slipped 1.5c to $1.565.