Sunnier sentiment lifts NZX to record
Confidence uptick and rising interest in M&A buoys shares
The S&P/NZX 50 index hit a record as investor sentiment was buoyed by a recovery in the latest business confidence survey and a better than expected earnings season, and a growing appetite among private equity buyers to pursue mergers and acquisitions.
The benchmark index rose as high as 11,273.22, and ended the session at 11,207.29, up 86.48 points, or 0.8 per cent. Within the index, 31 stocks rose, nine fell and 10 were unchanged. Turnover was $108.4 million.
Firms’ expectations for both the general economy and their own trading improved in ANZ’s November business outlook, the latest piece of data that has been better than economists’ expectations. ASB Bank economists pared back their expectations for interest rate cuts on the news, and now anticipate just one reduction in 2020 rather than the two previously forecast.
Investor sentiment was already elevated with a number of solid results in the September and March balance date reporting season. That received another tailwind as cashedup overseas buyers have shown renewed interest in listed companies across Australia and New Zealand, such as Canada’s Alimentation Couche-Tard bid for Caltex Australia.
Fishing group Sanford led the market higher, up 3.4 per cent at $7.65. The company reported a small decline in annual profit this month.
Shane Solly, a portfolio manager at Harbour Asset Management, said that was an example of how investors were reviewing the reporting season.
“They’re digesting what was an okay result against what could have been a very tough result,” he said Fisher & Paykel Healthcare,
which reported a 24 per cent lift in first-half earnings on Wednesday, was up 1.9 per cent at $21.51. It hit an all-time high of $21.77 on the day. Z Energy got a boost on Wednesday when the Caltex Australia bid emerged, and gave up some of those gains yesterday falling 0.4 per cent to $5.15. Investors are also awaiting the outcome of next week’s Commerce Commission report into the fuels market.
Metlifecare is engaged with an unnamed, but credible, buyer. It slipped 0.3 per cent to $5.84. Outside the benchmark index,
Smartpay soared 85 per cent to 51c after saying VeriFone had agreed to buy its New Zealand assets for $70m.
Similarly, Rakon was up 7.7 per cent at 28c after a report in the
Australian Financial Review’s Street Talk column speculated private equity firm Anchorage Capital was kicking the tyres at the firm.
Fletcher Building fell 1.3 per cent to $5.17 after issuing its 2020 earnings guidance with a small downside bias. Solly said the very wide range indicated there was still a lot of uncertainty for the construction company. Fletcher posted the biggest decline on the day, with 938,000 shares traded. Gentrack was unchanged at $4.15 after reporting an annual loss and 20 per cent decline in underlying earnings, having written off the value of a 2017 acquisition, and as it contended with a changing regulatory landscape in the UK. The shares dropped to a two-and-a-half-year low last week when it downgraded its guidance for a third time.
Meridian Energy was the most traded stock on a volume of 2.1 million. It rose 1 per cent to $4.525.
Kiwi Property Group was up 1.6 per cent at $1.585, Contact Energy rose 0.7 per cent to $7.06, Chorus advanced 1.9 per cent to $5.77, and
Goodman Property Trust increased 1.2 per cent to $2.135. Scott Technology rose 2.7 per cent to $2.30. The company announced that chief executive Chris Hopkins was stepping down from that role but would stay on the executive team. QEX Logistics rose 9.6 per cent to 80c. It reported a 51 per cent decline in first-half earnings as margins were squeezed, but said the second half is shaping up to be stronger. Moa Group was unchanged at 31c after reporting positive first-half earnings.