NZX50 powered by gentailers as govt unveils energy plan; US shutdown looms

New Zealand’s S&P/NZX 50 index started October on the front foot as electricity generator-retailers powered the benchmark, led by Meridian Energy, after the government announced plans for a new LNG import terminal and an appetite to support capital raisings by the mixed-ownership model companies for critical infrastructure investments.

Meanwhile, stock market across Asia were mixed as the US federal government looks set to shut down after congressional leaders failed to find an eleventh-hour deal to keep the lights on, stymieing economic data to inform the Federal Reserve’s rate review this month.

Ryman Healthcare’s debut on the ASX was relatively subdued with the retirement village operator ending the day unchanged across the Tasman, while nudging higher on the home bourse of NZX.

And the Fonterra Shareholders’ Fund eased from its record, posting the biggest decline on the day as the entity exposed to the dairy exporter’s earnings shed rights to the latest dividend.

Green light

The NZX50 jumped 141.63 points, or 1.1%, to 13,433.99, again accelerating into the match period when major institutional investors tend to make their trades. Within in the index, 40 stock stocks gained, seven declined and three were unchanged. Turnover across the main board was $181.2 million, of which Fisher & Paykel Healthcare accounted for almost $19 million as it rose 0.8% to $37.35.

Meridian Energy led the benchmark, rising 4.7% to $5.83 after the government announced its energy package to shore up the nation’s security of supply after last year’s winter hydro shortage underlined failings across the network.

Among the package announced by energy minister Simon Watts and finance minister Nicola Willis were procurement plans for an LNG import facility and a commitment to the government co-owned companies that the Crown will participate in capital raisings for commercially sound projects that are needed to preserve security of supply.

“LNG is the headline project, providing better dry-year risk, and Meridian as the most exposed because of its high weighting to hydro has gained the most,” said Peter McIntyre, an investment adviser at Craigs Investment Partners. “It’s probably a net/net gain for the gentailers.”

Among other power companies, Genesis Energy rose 2.1% to $2.40, Mercury NZ advanced 1.4% to $6.77, and Contact Energy increased 0.9% to $9.18. Lines company Vector gained 0.8% to $4.82, while import terminal operator Channel Infrastructure climbed 2.3% to $2.66.

Gains on New Zealand’s NZX50 were widespread, with a2 Milk Co up 4.3% at $10.38, Sky Network Television climbing 3.5% to $3.23, Sanford advancing 3.1% to $5.70 and Vulcan Steel increasing 2.4% to $8.40.

Fonterra Shareholders’ Fund units posted the biggest decline on the benchmark, falling 4.8%, or 40 cents, to $7.95, having shed rights to the upcoming payment of a 35 cents per share dividend. Fonterra Cooperative Group’s farmer-owned shares also went ex-dividend, falling 4%, or 25 cents, to $6.

Spark New Zealand was the most heavily traded stock on the day with a volume of 5.6 million, as it declined 0.4% to $2.34.

Wary investors

Meanwhile, stock markets across Asia were mixed as investors brace for another US federal government shutdown after policymakers weren’t able to find common ground over healthcare subsidies that are set to expire.

The kiwi dollar traded at 57.91 US cents at 5pm in Auckland from 57.90 cents yesterday.

Australia’s S&P/ASX 200 index was down 0.4% in late trading, while Japan’s Nikkei 225 index dropped 1% and Hong Kong’s Hang Seng rose 0.9%. S&P 500 futures were pointing to a 0.5% decline when Wall Street opens.

Fletcher Building rose 0.6% to $3.39 after government data showed building consents picked up in August, with gains starting to emerged in the Auckland and Wellington urban centres.

Satish Ranchhod, a senior economist at Westpac NZ, said it looks like New Zealand’s reached a base in the residential construction cycle, but a material turn is still to come.

“Even with those encouraging – albeit tentative – signs, a material upswing in home building isn’t until likely before the middle part of next year,” he said in a note.

Ryman Healthcare was unchanged at A$2.28 in its debut across the Tasman, where it’s taken a secondary listing, while gaining 0.4% to $2.60 on the NZX. Summerset Group Holdings climbed 1.2% to $10.81. Oceania Healthcare fell 2.9% to 67 cents.

Reporting by Paul McBeth. Image from Curious News.