NZX 50 dips in October as AI chill knocks Infratil

New Zealand’s S&P/NZX 50 index fell in October as Infratil dropped in its worst month in more than six years amid the hot-and-cold appetite for artificial intelligence stocks, while Summerset Group Holdings and Oceania Healthcare tumbled as the local housing market remains subdued.

The NZX 50 closed out October on a positive note, with Precinct Properties NZ climbing near a two-month high after it pushed pause on a major development of Auckland’s Downtown Carpark and signalled plans to return capital to shareholders.

Retailers were mixed as ANZ’s monthly gauge of consumer confidence showed households remained reluctant to make big-ticket purchases, while retaining their optimism that things would get better.

Stocks across Asia were mixed as underwhelming earnings from Amazon and Intel dented investors’ appetite for tech stocks, while Bitcoin dropped after crypto exchange Binance temporarily suspended all withdrawals and deposits while it investigated a hack affecting as much as US$6.3 billion of crypto.

All Hallows’ Eve eve

The NZX 50 rose 86.83 points, or 0.6% to 13,797 on Friday, taking its weekly gain to 0.5%, and slowing the monthly decline to 0.3%. Within the index, 28 stocks declined in October, 20 gained and two were unchanged.

Oceania posted the biggest decline in October as it fell 15%, while Summerset dropped 12% Ryman Healthcare was down a more muted 4.3%, with New Zealand’s subdued housing market and uncertainty over aged care reform continuing to hang over the sector.

Infratil dropped 12% in its steepest monthly decline since March 2020 as investors cooled on AI infrastructure after the aborted Firmus initial public offering and NextDC’s delayed Melbourne project.

Meanwhile, Gentrack posted the biggest gain in the month, up 13%, while Precinct rose 6.9% in October and Tower advanced 6.6%. The dual-listed lenders were also among the biggest gainers as Westpac Banking Corp climbed 6.2% and ANZ Group Holdings increased 6.1%.

In Friday trading, 28 stocks gained, 17 declined and five were unchanged. The S&P/NZX 20 index futures contract for December rose 0.4% to 7,535, with 550 lots traded for a value of $4.2 million, while the NZX 20 climbed 0.7% to 7,544.51.

Turnover across the main board was $160.4 million, of which Fisher & Paykel Healthcare accounted for $43.9 million as it gained 0.6% to $47.66.

Stocks across Asia were mixed with Japanese and South Korean markets knocked as investors soured on tech stocks after earnings from Intel and Amazon fell short of expectations, and as the Bank of Japan kept its benchmark interest rate unchanged, as expected.

The Nikkei 225 dropped 2.3% in late trading and the Kospi sank 4.8%, while Australia’s S&P/ASX 200 index increased 0.3% and Hong Kong’s Hang Seng advanced 1.6%.

Bitcoin tumbled 3.4% to US$78,045 at 5pm in Auckland after Binance suspended deposits and withdrawals and froze US$3 billion of assets after discovering a hack. The crypto exchange said it would cover all losses.

Unexpected help

New Zealand’s local market got an unexpected tailwind this week when the Reserve Bank unexpectedly kept the official cash rate at 2.75% on Wednesday, surprising analysts who’d all but locked in a hike.

“Our view is that a 25 basis point hike would have been the most prudent course, given the higher outlook for near-term inflation, resilience in activity indicators and the turn higher in Q3 core inflation measures,” ANZ New Zealand economists said in a note. “But as our recent Insight note highlighted, oil shocks are tricky, inflationary in the near term but bad for growth over the longer term, with no certainty about how the two will balance out.”

The yield on New Zealand’s 10-year government bonds fell 7 basis points to 4.81%, and was down 23 basis points in October. The kiwi dollar rose to 56.41 US cents at 5pm from 56.21 cents yesterday.

Rate sensitive property stocks were among the bigger gainers on Friday.

Precinct led the NZX 50 higher on Friday, up 7.5% at $1.01 after the commercial landlord said it wouldn’t press ahead with plans to develop the Downtown Carpark in Auckland due to market conditions, and would return capital through a $103 million share consolidation and buy back up to $50 million of stock.

Stride Property rose 4.8% to $1.09, Vital Healthcare Property Trust advanced 3.1% to $1.815, and Property for Industry gained 2.3% to $2.25.

Serko rose 4.2% to $1.23, taking its weekly gain to 22%, though was still down 7.5% in October.

Chorus rose 2.6% to $8.19 after the broadband network operator reported a small increase in fibre connections and uptake in the September quarter.

Fonterra Shareholders’ Fund units gained 1.9% to $8.993 after the dairy cooperative raised its forecast farmgate milk price by 25 cents to a midpoint of $9.75 per kilogram of milk solids, with growing demand for skim and whole milk powders.

Retailers were mixed after ANZ’s consumer confidence survey showed a 10 point drop in households’ appetite to make big-ticket purchases to a net 17% of respondents saying it was a bad time to buy a major item. The headline index eased as households grew more pessimistic about current conditions, while remaining more upbeat about the future.

Briscoe Group rose 2.7% to $4.23 and Hallenstein Glasson Holdings gained 1.9% to $14.77, while KMD Brands fell 0.5% to $1.87.

Vista Group International posted the steepest decline on the day, down 2.8% at $2.76, while Air New Zealand fell 2.6% to 37.5 cents, taking its monthly decline to 8.5%.

Outside the benchmark index, Warehouse Group was unchanged at 66 cents after activist shareholder Tommy Scrivener put a resolution to the retailer’s upcoming annual meeting seeking a valuation of some of the company’s property and suggesting a capital return if some or all of the sites were sold.

Barramundi was unchanged at 45 cents after the board told shareholders that it was negotiating a new management contract with Fisher Funds, but that the manager had agreed to introduce new guardrails while those discussions continued.

The two other NZX-listed investment entities managed by Fisher were weaker, with Kingfish down 0.8% at $1.10 and Marlin Global declining 0.7% to 72 cents.

After the closing bell, Third Age Health Services reported a 38% increase in first-half profit, with ARC Medical Services the biggest contributor of revenue and earnings growth. The shares fell 3% to $4.20 before the result.

Reporting by Paul McBeth. Image from Curious News.