Fletcher Building and Spark New Zealand drove the S&P/NZX 50 index higher with the benchmark’s old dominant pairing attracting plenty of speculation about takeovers and asset sales.
Meanwhile, stocks across Asia were generally stronger after the US and China trade talks seemed to end on a positive note as the superpowers agreed not to antagonise the other, although the tariff-exposed Mainfreight and Fisher & Paykel Healthcare were both on the red side of the ledger today after the regime was kept in place while the White House appeals a ruling deeming them to be unlawful.
And Serko gained after its rating was upgraded by Forsyth Barr analysts with the prospect of recovering investor confidence back on the cards after rebasing their expectations.
Across the Tasman, Qantas Airways slipped after closing Jetstar Asia and redirecting planes to Australia where it can extract fatter margins on more lucrative routes. Air New Zealand was unchanged.
Back-to-back
The NZX50 rose for a second day, up 41.51 points, or 0.3%, at 12,605.93, with 20 stocks gaining, 23 falling, and seven unchanged. Turnover across the main board was $139.8 million.
Fletcher Building led the local market higher, surging almost 10% to $3.31 after saying it’s received ongoing inquiries interested in its businesses, including the construction arm, which faces litigation from SkyCity Entertainment Group – down 1% at 95 cents – over the late delivery of the international convention centre. The building materials firm said no decisions have been made and it will talk more about its strategic review on June 24 at an investor day briefing.
“It’s a slightly surprising reaction – it would seem unlikely with the litigation around,” said Matt Goodson, managing director at Salt Funds Management. “The seller would have to provide very strong warranties that last for a while.”
Goodson said Fletcher would typically be well-placed at this stage in the economic cycle as falling interest rates feed through the system, but there’s too much uncertainty about its future until the investor day briefing.
Spark was also stronger, climbing 2.9% to $2.34 – its highest close since February – on a volume of 5.2 million shares after The Australian newspaper’s DataRoom column reported US private equity firm KKR is considering making a play for New Zealand’s biggest telecommunications company.
Goodson said it was a highly speculative report, with very few options left for a private equity player to extract value given Spark’s own efforts to cut costs and sell assets.
Managing expectations
Serko climbed 3.6% to $2.91 after Forysth Barr analysts raised the rating on the stock to ‘outperform’ from ‘neutral’, and lifted their target price 4 cents to $3.70.
“With valuation near trough levels relative to peers and history, we see a favourable risk–reward backdrop if Serko can restore confidence in its growth trajectory,” analysts James Lindsay and Will Twiss said in a note to clients.
Stock markets across Asia were broadly stronger after the US and Chinese officials wrapped up their latest trade talks with a framework to get their truce back on track. A key issue was export controls and US access to rare earth minerals.
Australia’s S&P/ASX 200 index was up 0.1% late trading while Hong Kong’s Hang Seng jumped 1% and Japan’s Nikkei 225 was up 0.5%. The kiwi dollar traded at 60.35 US cents at 5pm in Auckland from 60.51 cents yesterday.
Meanwhile, Mainfreight fell 2.5% to $68.76 and F&P Healthcare declined 0.5% to $36.58 after a US federal appeals court granted the Trump administration’s request to keep the tariff regime in place until the case is considered, with a hearing scheduled for July 31.
Tower fell 3.2%, or 5 cents, to $1.50 after shedding rights to an 8-cent dividend. The insurer also confirmed Paul Johnston as permanent chief executive, a role he’d been acting in since February.
Infratil rose 0.6%, or 6 cents, to $10.18 after shedding rights to a 13.25-cent dividend.
Heartland Group Holdings posted the biggest decline on the benchmark index, falling 3.6% to 80 cents.
Across the Tasman, Qantas slipped 1.3% after announcing plans to close its Jetstar Asia division, which has been operating since 2004. The Australian carrier will redirect 13 plans to Australia and New Zealand and end 16 routes. Air New Zealand was unchanged at 58.5 cents.
Reporting by Paul McBeth. Image from Greyson Joralemon on Unsplash.
