RBNZ’s Quigley gone; NZX50 ends August higher in mixed earnings season

Reserve Bank chair Neil Quigley has resigned from the central bank’s board with immediate effect, after the Chief Ombudsman ordered a timeline of the controversial exit of governor Adrian Orr be made public.

The S&P/NZX 50 index closed out the month on a positive note to end August up 0.8% after a mixed earnings season where bellwether stocks such as Freightways and Turners Automotive Group hinted the economy might have passed the trough.

Meanwhile, Port of Tauranga helped pace gains on the day after reporting a robust annual profit as expected, while Delegat Group bounced back from some severe selling with its earnings better than some investors had feared.

Infratil was left out in the cold after Australia’s NextDC soared 17% on guidance indicating swelling demand for data centres, while Virgin Australia’s return to the ASX delivered a 28% increase in annual earnings.

Friday dump

Reserve Bank chair Neil Quigley ended his 15-year tenure on the board of the central bank, the last nine of which were as chair, resigning with immediate effect a day after the Chief Ombudsman ordered the release of a timeline surrounding governor Adrian Orr’s controversial exit earlier this year.

Finance minister Nicola Willis – who reappointed Quigley for another two-year term last year – thanked the departing chair for his service.

“Mr Quigley has decided that having overseen a number of key workstreams for the Bank, now is the appropriate time for him to hand over to a new chair,” Willis said in a statement on Friday evening. “Mr Quigley departs with a new funding agreement in place, a major review of capital settings out for consultation and the recruitment of a new governor well-advanced.”

The kiwi dollar barely budged, trading at 58.90 US cents at 6pm from 58.92 cents at 5pm, before the announcement, and up from 58.60 cents yesterday.

Meanwhile, the NZX50 ended August up 0.8% in its four straight monthly gain after a mixed earnings season, albeit one that’s being seen as potentially a turning point for the economy, with some of the bellwether stocks such as Freightways and Turners growing more optimistic about the outlook. Freightways slipped 1.1% to $12.16 today, while Turners declined 0.6% to $6.90.

The benchmark index rose 27.65 points, or 0.2%, 12,930.73 on the day, with 31 stocks gaining, 13 declining, and six unchanged. Turnover was $164.1 million across the main board, with trading a little heavier than usual as investors tweaked their portfolios for the end of the month.

The price of certainty

Port of Tauranga was among the gainers on the day, up 2.2% at $7.06 after hiking its annual dividend and lifted earnings 23%, with increased trade volumes.

“Port of Tauranga was very much in line with expectations, and is indicative of the market environment where investors are willing to pay a premium for certainty,” said Matt Goodson, managing director at Salt Funds Management.

Summerset Group Holdings gained 3.2% to $10.99 as the retirement village operator found more support after yesterday’s first-half result, with Ryman Healthcare joining it higher, gaining 0.8% to $2.39.

Index heavyweight Meridian Energy rose 1.8% to $5.71, helping buoy the bourse, while KMD Brands led the NZX50 higher, up 4.4% at 24 cents.

Infratil posted the biggest decline on the day, falling 1.9% to $11.36 and missing out on the upbeat tone across the Tasman on data centres from ASX-listed NextDC’s outlook, which helped propel it up 17%.

Meanwhile, Air New Zealand slipped 0.8% to 59 cents, following Virgin Australia lower after the Australian airline reported a 28% lift in annual earnings – not enough to allay fears that it might miss analysts’ expectations later this year.

Auckland International Airport declined 0.6% to $7.55 on a volume of 2.9 million shares, the most heavily traded stock on the day.

Outside the benchmark, Delegat surged almost 11% to $4.05 after the winemaker reported a 14% decline in operating profit at a 12% drop in global case sales.

“Delegat’s has been incredibly hard hit over the last week or two, and the result was better than feared,” Salt’s Goodson said.

Reporting by Paul McBeth. Image from Curious News.