Shares rise again as Asia gets a boost

Broker points to bullish factors for buoyant market

New Zealand shares rose for a fourth day as investors bet that further central bank stimulus and ongoing low interest rates will continue to support equities.

The S&P/NZX 50 Index gained 87.52 points, or 0.8 per cent, to 11,743.73. Within the index, 27 stocks rose, 20 fell, and three were unchanged. Turnover was $129 million.

Sharemarkets across Asia started the week with a “positive mindset” after a front-page editorial in the China Securities Journal said “fostering a healthy bull market” was important to the Chinese economy, ASB economist Mark Smith said.

The state-sanctioned editorial triggered strong gains for Chinese equities on Monday and yesterday, and NZ’s benchmark joined the regional rise.

Peter McIntyre, an investment adviser at Craigs Investment Partners, said the steady upwards march was due to low interest rates and financial stimulus from central banks supporting equities and their promise of higher returns to investors.

“Bad news is now good news for equity markets because investors are really betting on further stimulus and lower interest rates for longer,” McIntyre said. “That tailwind is pretty strong, and I don’t think it is going to die down anytime soon.”

However, it isn’t all just hot air, McIntyre said. Low interest rates and government bond buying enables companies to access cheap debt to fuel growth and shareholder returns.

“The useful use of that debt is to pay down high interest debt or acquire other companies,” he said.

Skellerup Holdings led the market higher, rising 3.8 per cent to $2.21. The company on Monday said it will release its financial result to the market on August 21, having already given upbeat guidance. Goodman Property Trust rose

2.4 per cent to $2.135 and Chorus advanced 2 per cent to $7.85. Fisher & Paykel Healthcare

increased 1.7 per cent to $35.74, having shed rights to its 15.5c per share dividend on Monday.

A2 Milk gained 1.4 per cent to $21.19. Both stocks have been stronger through the pandemic and now account for almost 30 per cent of the index. That combined weighting underpinned yesterday’s increase for the index. Air New Zealand posted the day’s biggest decline, falling 2.4 per cent to $1.42 and Auckland International

Airport slipped 0.3 per cent to $6.37. The national carrier yesterday agreed to temporarily suspend all new bookings into NZ for the next three weeks to help the government manage accommodation capacity at its isolation and quarantine facilities.

Pushpay Holdings declined 0.9 per cent to $9.13 as investors took some profit off the stock which has been trading near record highs. Across the Tasman, Australian fintech company Afterpay yesterday announced a A$1 billion ($1.06b) capital raise.

Outside the benchmark index,

Scott Technology climbed 9.1 per cent at $1.80. The robotics and automation firm said it expects earnings to take a material hit from the Covid19 pandemic, but there are signals that revenue streams are returning to normal as a number of projects come back online.