Shares lift after Govt reveals big spend

Market ends down 0.4% after rebound from early selloff

New Zealand shares recovered from an early selloff as the Government revealed a $12.1 billion stimulus package to bolster the domestic economy in the face of a looming recession.

The S&P/NZX 50 Index fell 42.20 points, or 0.4 per cent, to 9434.74, its seventh consecutive decline. Within the index, 29 stocks fell, 18 rose, and three were unchanged. Turnover was heavier than usual at $316 million.

Finance Minister Grant Robertson’s injection into the economy aims to soften the impact of the pandemic threatening to spur the next recession. The package, the equivalent of 4 per cent of the economy, is a mix of wage subsidies, tax breaks, increased welfare support, and targeted spending in health and aviation.

The local benchmark — which had dropped as much as 5 per cent — began recovering around midday and received an extra bounce after the package was announced.

Kiwibank economists said the market responded positively to the package, which provided a backstop for businesses and reduced the risk of increased loan defaults.

“The Kiwi wholesale rate curve lifted a little and steepened a little. That’s the market’s way of inserting more growth and inflation into the forecast profile,” they said.

Matthew Goodson, managing director of Salt Funds Management, said there was “get me out at any price” selling during the morning, which was absorbed during the day.

While the NZX50 rose at the time of the economic package, that coincided with a sharp rise in US futures and on the S&P/ASX200, up 3.4 per cent in afternoon trading.

“I wouldn’t put the intra-day turnaround all down to the package itself.”

Heartland Group Holdings led the market lower, falling 11.6 per cent to $1.07, its lowest level in five years.

Vista Group International sank 10.9 per cent to a record-low $1.55. The cinema analytics software maker yesterday cancelled its dividend due next week to preserve its balance sheet. It also withdrew its 2020 earnings guidance as it struggles with the murky outlook for movie-goers.

Gentrack Group slid 10.7 per cent to $1.34 after the airport and utilities software developer suspended its annual guidance amid uncertainty. Auckland International Airport

fell 2.3 per cent to a five-year low $5.10 after it cancelled next month’s dividend payment and said it’s reviewing its capital spending programme.

Air New Zealand shares stayed halted at $1.54. The Government’s $600m aviation package specifically excluded support for Air NZ. Robertson, who is a shareholding minister in the airline, said the Government is still in discussions with the company.

Mainfreight rose 2.3 per cent to $30.18. The global logistics firm said its trading so far this year was ahead of the period in 2019, and global freight trade lanes were still open.

Courier operator and data management firm Freightways climbed 11.3 per cent to $5.61 and Port of Tauranga rose 6.5 per cent to $5.75.

Fisher & Paykel Healthcare fell 1.2 per cent to $24.90 despite raising its earnings guidance. Outside the benchmark index,

New Zealand King Salmon sank 1.7 per cent to $1.74 after it affirmed annual earnings guidance.