A2 Milk sours the New Zealand market
School holidays mean a slow start with only light trading but more action expected from US later in the week
New Zealand shares dropped in light trading, with A2 Milk Co and Synlait Milk leading the index lower, while Pushpay Holdings and Fletcher Building gained.
The S&P/NZX50 Index fell 19.6 points, or 0.2 per cent, to 8,303.62. Within the index, 25 stocks rose, 15 fell and 10 were unchanged. Turnover was $84 million.
“We’ve certainly got that school holiday feel, it’s very sluggish,” said Peter McIntyre, investment adviser at Craigs Investment Partners. “We got mixed messages from Friday’s close in the US — the pointer to the market is where US 10-year Treasury notes got to and it’s sitting at 2.9738 as I speak. The watermark is 3 per cent, that’s what a number of analysts and market commentators have consistently looked at as a signal for the market to become weaker or have some more volatility. Even though futures are lining up okay, I think that’s going to weigh on the minds of investors in the US, and will impact on us potentially later in the week.”
A2 Milk led the index lower, dropping 3.1 per cent to $12.37.
“It’s following its trading pattern in Australia too, on light volume for A2,” McIntyre said. “It’s been bouncing around ever since Nestle said they’d be competitors in that Chinese market, there’s a bit of nervousness about competition despite A2 wanting to expand into other Asian markets.”
Synlait Milk, which supplies A2, dropped 2.2 per cent to $9.81. Vector fell 1.2 per cent to $3.20, Air New Zealand dropped 1.2 per cent to $3.25, and Mainfreight declined 1.2 per cent to $24.01. Pushpay Holdings was the best performer, up 2.5 per cent to $4.10, while Westpac Banking Corp rose 1.6 per cent to $30.86.
New Zealand Refining gained 1.3 per cent to $2.36. At the company’s annual meeting yesterday, chief executive Sjoerd Post said the failure of the pipeline between the plant at Marsden Point and Auckland in September 2017 had a net impact on profit of $8.2 million. At the end of February, the company declared a 66 per cent increase in net profit for the year to December 31 to $78.5 million, driven by historically high average refining margins of US$8.02 per barrel of oil processed.
Fletcher Building rose 0.8 per cent to $6.20. Last week, it completed the institutional entitlement offer and shortfall bookbuild component of its capital raising plan, reaping $515 million of $750 million target. Institutions paid $6.15 in the bookbuild — above the discounted offer itself at $4.80. The retail entitlement offer opened yesterday.