Index reweightings take edge off soft week for NZX50

New Zealand’s S&P/NZX 50 fell 0.6% in the last full week of trading, as the quarterly rebalancing for S&P/NZX and FTSE Russell indices drove heavy volumes, particularly for Precinct Properties NZ and Vital Healthcare Property Trust.

Tech stocks Gentrack and Vista Group International were among the weakest performers on the week as global investor sentiment soured on the artificial intelligence boom, growing increasingly sceptical about the ability to generate returns on the major infrastructure investment underway.

Retailers such as KMD Brands and Briscoe Group were among the leaders on Friday as ANZ’s latest consumer and business confidence surveys showed households and firms in good heart as offices pack up for the summer break.

Stocks across Asia followed the bounce on Wall Street after soft inflation kept expectations in place for the Federal Reserve to keep cutting its benchmark interest rate next year, while the Bank of Japan today raised its key rate a quarter-point to its highest level in 30 years.

Happy holidays

The NZX50 rose 76.63 points, or 0.6%, to 13.333.4 on Friday, with 26 stocks gaining, 20 declining and four unchanged.

That took the weekly decline to 0.6% – the third week in a row – in a week where fears about the pace of AI infrastructure spending knocked tech stocks around the globe. Vista Group International sank 8.8% to end the week at $2.48, while utilities software developer Gentrack dropped 8.7% to end Friday at $8.35. Infratil, which counts CDC Data Centres as its biggest investment, fell 3.5% across the week after snapping a four-day decline on Friday to close at $10.98.

Volumes on Friday were bigger than usual after the session was extended for the quarterly index rebalancing for S&P/NZX and FTSE Russell indices, with turnover across the mainboard $370.2 million.

Vital Healthcare accounted for $36.3 million as it dropped 1.8% to $1.945, with 18.6 million units changing hands, while Fisher & Paykel Healthcare rose 0.5% to $37.10 on a turnover of $35.9 million and Ebos Group gained 2.2% to $27.53 on a turnover of $32.7 million.

Precinct Properties dipped 0.9% to $1.165 with 14.46 million shares traded.

Consumer facing companies were among the leaders on Friday after ANZ’s consumer confidence survey showed household sentiment at its highest level since September 2021 and declining pessimism about making big ticket purchases.

Meanwhile, ANZ’s business outlook survey showed resurgent confidence among firms, with the services, retail and construction sectors feeling more buoyant about their own activity.

“What’s been most encouraging in recent months is that the high level of confidence is now being accompanied by an improvement in firms’ actual performance,” Westpac NZ senior economist Michael Gordon said in a note. “A net 29% of firms reported that activity was up on a year ago, compared to 21% in November. This was the strongest result since August 2021.”

Rising retailers

KMD Brands led the NZX50 on Friday, rising 5.7% to 28 cents, while casino operator SkyCity Entertainment Group gained 4.7% to 89 cents and homeware and sporting goods chain Briscoe Group advanced 2% to $5. Hallenstein Glasson Holdings was unchanged at $9.63.

Channel Infrastructure rose 3.3% to $2.84 in its first day with a secondary listing on the ASX, while Trade Window dropped 6.5% to 29 cents in its first day of trading in Australia.

Heartland Group Holdings gained 1.8% to $1.12 after Kiwibank said it won’t raise equity from institutional investors after struggling to meet terms with potential investors, and will instead rely on the Reserve Bank’s capital requirement tweaks and a recent $400 million sale of subordinated notes to help pay for overhauling its IT infrastructure.

Tourism Holdings rose 1.2% to $2.47 after saying shareholder and director Luke Trouchet will no longer hold an executive role after the rental campervan firm’s recent restructuring. Trouchet is pooling his family’s stake with BGH Capital with a view to mounting a takeover of the firm.

Vista Group International posted the biggest decline on the day, falling 2.8%, while Ryman Healthcare slipped 2.7% to $2.86 and Skellerup Holdings declined 2.5% to $5.14.

Freightways, often seen as a bellwether for the economy, fell 1.4% 1.4% to $14, snapping a three-day run that spanned the announcement of its recent acquisition in Australia.

Fletcher Building slipped 1.4% to $3.60.

Outside the benchmark index, Bremworth slipped 1.2% to 85 cents after the Commerce Commission said it’s releasing a statement of issues paper on the proposed acquisition of the carpetmaker’s business by rival Godfrey Hirst’s parent, Mohawk Industries.

Stock markets across Asia were broadly stronger, with Australia’s S&P/ASX 200 index up 0.6% in late trading, Japan’s Nikkei 225 index climbing 1.2% and Hong Kong’s Hang Seng advancing 0.7%, following Wall Street’s lead when softer inflation figures reaffirmed expectations the Federal Reserve will continue cutting interest rates next year.

The Bank of Japan hiked its benchmark rate a quarter-point to 0.75% today, taking it to the highest level since 1995, as the central bank grows more convinced it can achieve the stable inflation target it’s chased for more than a decade.

The kiwi dollar traded at 89.83 yen at 5pm in Auckland from 89.67 yen yesterday, and was little changed at 57.65 US cents from 57.57 cents.

Reporting by Paul McBeth. Image from Curious News.