Market commentary

RISING bond yields at home and a fall in leading energy stocks Contact and Meridian took the heat out of the New Zealand sharemarket at the end of a volatile trading week.

The S&P/NZX 50 Index started strongly before steadily sliding from lunchtime and then having a slight late recovery. The index was down 36.29 points or 0.28% to 13,012.19, after reaching an intraday high of 13,126.77 and low of 13,002.44.

There were 88 gainers and 53 decliners over the whole market, and volume was boosted by late trading in Contact and Meridian, with a total of 59.21 million shares worth $227.52 million changing hands.

The New Zealand 10 Year Government Bond Yield reached a 30month high with a four basis points increase to 2.25%, according to Bloomberg — the first time it has been above 2.2% since March 2019. The yield was 0.5% this time last year.

Shane Solly, portfolio manager with Harbour Asset Management, said: "While bond yields have softened in Europe and the US, ours have gone up. This reflects the Reserve Bank monetary policy tightening and the expected increase in the third quarter consumer price index to close to 4%.

"Mind you, there is a better tone to the market with the reset of bond yields and a series of annual meetings coming up next week. We will get some updates and a gauge on earnings growth," Solly said.

Ebos Group, Fletcher Building, Auckland International Airport, Tourism Holdings, Comvita and PGG Wrightson are holding annual meetings.

The iShares Global Clean Energy Exchange Traded Fund was having its final day of rebalancing, and Contact was down 14c or 1.71% to $8.07 on trade worth $36.31 million. Meridian declined 6.5c to $4.835 on trade worth $37.6 million.

After its strong rebound, a2 Milk gave back 14c or 1.94% to $7.08, after reaching an intraday high of $7.46. Synlait was down 15c or 3.83% to $3.77.

Solly said there was conflicting data out in the market about whether the daigou sales channel was back fully functioning.

Arvida went into a trading halt after announcing it is buying six Arena Living retirement villages from Blackstone in Auckland and Tauranga for $345 million. This will add 648 villas and 398 apartments to its existing portfolio of 4325 units and beds, representing a 24% expansion. The acquisition will contribute an additional $32 million$34 million to the 2022 profit.

To pay for the purchase, Arvida is making $155 million placement at $1.96 a share, and it will also implement a $175 million renounceable rights offer at $1.85 a share. Arvida last traded at $2.08.

Solly said the deal seemed well thought out.

Fisher and Paykel Healthcare declined 26c to $30; Freightways shed 13c to $12.67; and Vista Group fell 6c or 2.31% to $2.54.

Mainfreight dropped $2.07 or 2.32% to $87.25 — the first time it has been under $90 for nearly two months.

Port of Tauranga recovered 13c or 1.92% to $6.90; Ryman Healthcare increased 25c to $15; Trustpower collected 22c or 3.05% to $7.44; Restaurant Brands picked up 25c to $15.73; and Michael Hill International was up 5c or 5.05% to $1.04.

Meal kit firm My Food Bag increased 3c or 2.5% to $1.23 after providing a halfyear update, with 808,000 deliveries and revenue of $98.4 million in line with expectations. My Food Bag has 76,875 active customers, up 3.3%, and intends to pay an interim dividend in December. —