NZX 50 ekes out small gain as Gentrack, Vista join tech rally

New Zealand’s S&P/NZX 50 index ended the day in positive territory as heavyweight companies duked it out over which side of the ledger the benchmark would close, with gains for Meridian Energy and Ebos Group tipping it into the green.

Software firms Gentrack and Vista Group International joined the tech rally on Wall Street, where firms shrugged off the rising bond yields that typically weigh on valuations.

Infratil declined in one of the bigger drags on the local board amid reports that its CDC Data Centres unit had ended partnership with Firmus Technologies valued at up to A$73 billion to build data centres across Australia.

And Christchurch scion George Gould emerged as a substantial shareholder of minnow retirement living and aged care provider Promisia Healthcare.

An inch either way

The NZX 50 increased 1.1 points to 13,700.12, with 27 stocks gaining, 19 declining and four unchanged. The S&P/NZX 20 index slipped 0.1% to 7,500.96, with the futures contract untraded.

Turnover across the main board was $113.6 million, of which Fisher & Paykel Healthcare accounted for $17.3 million as the country’s biggest listed company decreased 0.2% to $46.50.

Meridian rose 0.9% to $5.41 and Ebos gained 3.5% to $19.14, helping offset declines from other heavyweight stocks, such as Auckland International Airport’s 0.8% decline to $8.31.

Local tech companies were broadly stronger, following a strong lead from Wall Street where the Nasdaq Composite closed at a new record, even as government bond yields pushed new multi-year highs.

Gentrack posted the biggest gain on the day, up 6% at $3.88 after Australian investor Yarra Capital Management emerged as a substantial shareholder of the utilities software firm, with a 5.1% stake. Vista Group International advanced 0.4% to $2.78, although travel software firm Serko dropped 4% to $1.21, the sharpest decline on the day.

Stock markets across Asia were broadly stronger while Chinese markets were closed for the Golden Week holiday. Hong Kong’s Hang Seng was up 0.8% in late trading, while Japan’s Nikkei 225 index climbed 0.5% and Australia’s S&P/ASX 200 index rose 0.6%.

“The tech companies continued to push higher, even though US bond yields remain extremely elevated,” said Jeremy Sullivan, an investment adviser at Craigs Investment Partners. “US jobs data last week took a bit of pressure off the Federal Reserve, but longer-term rates haven’t really followed suit.”

The yield on New Zealand 10-year government bonds rose 6 basis points to 5.05% at 5pm in Auckland, compared with 5.32% for their US equivalent.

The kiwi dollar traded at 56.01 US cents at 5pm from 55.88 cents yesterday after the New Zealand Institute of Economic Research’s quarterly survey of business opinion showed firms grew increasingly optimistic about the general economic outlook, even as their own activity remained muted.

Risky business

Kiwibank economists said there was a risk that businesses’ optimism relied too much on a rapid recovery in demand, most of which was outside their control.

“While this data was certainly a welcome sign of optimism after a challenging year to date, this is not a licence to increase interest rates,” the Kiwibank economists said in a note. “Doing so risks squashing a recovery in demand that is so needed for businesses to thrive going forward.”

Tower rose 2.5% to $2.04 after upgrading its profit guidance for underlying earnings to be between $69 million and $79 million compared with an earlier forecast of $55 million-to-$65 million, with favourable weather limiting how many claims it received.

Spark New Zealand was the most heavily traded stock on the day, with 2.4 million shares changing hands as the telco increased 0.8% to $1.975.

Stock market operator NZX was unchanged at $1.49 after the company’s monthly operating metrics showed trading activity dipped in September, while funds under management at its Smart unit grew 17%.

Infratil fell 0.7% to $13.82 after Rampart reported CDC ended a plan to build data centres around Australia in partnership with ASX listing candidate Firmus.

Separately, filings to the stock exchange showed Morrison chief executive Paul Newfield had bought almost 39,000 shares of the infrastructure investment firm on market at an average price of about $13.90.

Outside the benchmark index, AFT Pharmaceuticals increased 0.7% to $4.33 after saying first-half revenue grew at a double-digit pace and affirming its $300 million target for the March 2027 financial year.

And Promisia gained 3.9% to 67 cents after Gould Holdings emerged with a 12% stake, buying 7 million shares at 70 cents apiece and 6 million warrants at 25 cents.

Reporting by Paul McBeth. Image from Curious News.