NZX 50 ends strong July on sour note

New Zealand’s S&P/NZX 50 index rose for a third month in July, with changing fortunes of SkyCity Entertainment Group and Mainfreight helping lead the benchmark higher for the month.

AFT Pharmaceuticals was the best performer across the main board on the month, capping July off with chair David Flacks flagging plans to retire before next year’s annual meeting.

Still, heavy selling of large names on Friday left the NZX 50 as one of the laggards across Asia after Microsoft’s strong cloud result revived confidence in the artificial intelligence trade, prompting South Korea’s Kospi to roar back into life.

Spark New Zealand led the local market lower, with Fletcher Building and a2 Milk Co at the bottom of the leaderboard, while end of month trading drove big volumes for Contact Energy, Fisher & Paykel Healthcare and Infratil.

Losing momentum

The NZX 50 fell 63.5 points, or 0.5%, to 13,699.28 on Friday, with 22 stocks declining, 18 gaining and 10 unchanged. That pared the benchmark’s gain in July to 0.6%, following stronger months in May and June.

SkyCity posted the biggest gain on the month, climbing 13%, while Mainfreight advanced 12%. The a2 Milk Co posted the steepest decline on the month, falling 9.8%, while Port of Tauranga shed 9%.

The benchmark ended the week down 0.5%.

The S&P/NZX 20 index futures contract for September fell 0.2% to 7,700 on Friday, with 25 lots traded for a value of $194,000, while the NZX 20 dropped 0.6% to 7,726.19.

Turnover across the main board was $165.5 million, with Contact accounting for $19.6 million of that as it gained 0.8% to $9.10. F&P Healthcare slipped 0.2% to $40.69 on a turnover of $19.5 million, while Infratil nudged up 0.2% to $14.78 with $17.1 million traded.

The local market was one of the weakest across Asia, with South Korea’s Kospi surging 17% on the renewed appetite for AI stocks and Japan’s Nikkei 225 index up 4.3%. Australia’s S&P/ASX 200 index gained 0.2%, while Hong Kong’s Hang Seng dipped 0.2%.

“We started the day in a dominant fashion but finished it with a whimper,” said Peter McIntyre, an investment adviser at Craigs Investment Partners. “There’s been some big volumes in some of the largest stocks, with a fair bit of volume running through them for month-end.”

Spark led the benchmark lower on the day, falling 3% to $1.92 on a volume of 3.3 million shares, the most for the day, while Fletcher declined 2.7% to $3.65 and a2 Milk dropped 2.6% to $8.25.

Gentrack posted the biggest gain on the day, up 2.6% to $3.61, and helping limit its monthly decline to 7.2%, while Oceania Healthcare rose 2% to 75.5 cents and Vector advanced 1.9% to $4.95.

Trucking on

Mainfreight rose 0.3% to $69.20 after Forsyth Barr analysts Andy Bowley and Hugh Lockwood raised their target price on the logistics group by $7 to $89, and affirmed their ‘outperform’ rating, saying the trading update at yesterday’s annual meeting marked a “dramatic return to synchronised growth”.

Retailers were stronger after the ANZ-Roy Morgan consumer confidence index showed a recovery in households’ appetite to make big-ticket purchases.

Briscoe Group rose 1.1% to $4.60 and KMD Brands gained 0.6% to $1.81, while Hallenstein Glasson Holdings edged up 0.1% to $10.65.

Outside the benchmark, Michael Hill International rose 3.7% to 42 cents – its fourth straight gain – after saying annual sales rose 3.9% on a constant currency basis, and that it would report earnings growth of between 44% and 57%.

AFT was unchanged at $4.81, leaving its monthly gain at 31% after new broker coverage and an update on its development pipeline renewed interest in the pharmaceutical firm. Chair David Flacks signalled plans to retire in the coming year.

T&G Global increased 0.5% to $2.23 after signing sale and purchase agreements for its New Zealand fresh produce and Fijian and Pacific Islands export businesses, and also selling its controlling stake in a domestic root crop prepacking venture.

After trading closed, Third Age Health reported a 33% increase in June quarter profit as acquisitions helped swell its patient numbers. The stock fell 1.1% to $4.47 on the day.

And the kiwi dollar clawed back earlier losses against the yen, trading at 94.27 yen at 5pm in Auckland from 94.93 yen yesterday after the Bank of Japan kept its key rate on hold, having intervened in currency markets before the central bank’s meeting.

The New Zealand dollar traded at 58.68 US cents from 58.06 cents, and was on track for a 3.5% gain against the greenback this month.

Reporting by Paul McBeth. Image from Curious News.