The retail switch was on display as Briscoe Group surged on its addition to the benchmark S&P/NZX 50 index later this month, usurping rival Warehouse Group’s spot as the Red Sheds operator led the market lower in a quiet session with Australia on holiday.
SkyCity Entertainment Group rallied despite the scepticism Forsyth Barr analysts have about its ability to claw more money out of Fletcher Building over the much-delayed construction of the international convention centre.
And that was before the latest S&P/Dow Jones Indices rebalancing showed the casino operator will drop out of the top 20 index later this month, replaced by utilities software developer Gentrack.
Meanwhile, Virgin Australia’s prospectus for its A$685 million initial public offering was lodged late last week, providing some light reading for Australians over their long King’s Birthday weekend.
Odd one out
The NZX50 fell 24.22 points, or 0.2%, to 12,538.26, with 21 stocks declining, 21 gaining and eight unchanged. Turnover across the main board was a light $65.4 million with Australian markets closed for the King’s Birthday public holiday.
That was despite a strong lead from Wall Street on Friday when better-than-expected jobs data spurred on gains, while stock markets across Asia were broadly stronger with Singapore’s Straits Times Index increasing 0.1% in late trading, Japan’s Nikkei 225 index up 0.9% and Hong Kong’s Hang Seng advancing 1%.
The kiwi dollar traded at 60.37 US cents at 5pm in Auckland from 60.46 cents last week.
Retailers dominated the news locally as Warehouse led the benchmark index lower, falling 3.2% to 91 cents as investors reacted to its upcoming removal from the NZX50.
Meanwhile, Briscoe surged 9.8% to a six-month high $5.40. Managing director Rod Duke owns three quarters of the company and told BusinessDesk he might need to reduce that holding a little to improve its liquidity once it joins the NZX50 and institutional investors tracking the index have to hold its shares.
Other retailers were also stronger, with KMD Brands up 3.3% at 82 cents and Hallenstein Glasson Holdings advancing 2.2% to $8.
Ambitious application
SkyCity posted the biggest gain on the benchmark index, up 5.3% at 99 cents, despite Forsyth Barr analysts Andy Bowley and Paul Laxton Koraua doubting the casino operator’s claim against Fletcher for liquidated damages will be successful. They kept their target price of $1 and ‘underperform’ rating on the stock.
“Under prevailing law, a liquidated damages clause is considered a binding and exhaustive remedy. This would prevent SkyCity from claiming further damages unless it can prove that Fletcher has been grossly negligent in fulfilling its contractual obligations,” Bowley and Laxton Koraua said in a note to clients. “The legal threshold for gross negligence is high, and the burden of proof rests with SkyCity.”
Fletcher fell 1.6% to $3.02. Separately, the building materials firm’s shareholder Allan Gray filed a notice to the NZX showing its stake increased to almost 19% from 18%.
And after trading closed, S&P/Dow Jones Indices said SkyCity will leave the NZX20 index later this month, with Gentrack taking its place. The software company was unchanged at $12.35.
Heavy lifting
Goodman Property Trust was the most heavily traded stock with a volume of 1.1 million units as it fell 0.5% to $1.96, while Spark New Zealand rose 0.7% to $2.26 on a volume of 1 million.
Outside the benchmark index, Comvita gained 3.5% to 60 cents after hiring former Miraka chief Karl Gradon to take over the reins at the honey products maker.
Travel and tourism firms were broadly stronger after the government announced a $13.5 million boost to marketing in an effort to attract 72,000 more visitors to New Zealand’s shores. Air New Zealand rose 0.9% to 59.5 cents and Auckland International Airport increased 0.3% to $7.845, while Tourism Holdings was unchanged at $1.38 and Serko was unchanged at $2.83.
Across the Tasman, Virgin Australia lodged its prospectus for its upcoming IPO on Friday, showing the carrier will sell shares at A$2.90 apiece in its return to public markets, raising A$685 million with a view to start trading on the ASX on June 26. New Zealand institutions will be invited to participate, although the offer isn't being extended to retail investors on this side of the Tasman.
The local stock market operator, NZX, rose 1.3% to $1.53.
Reporting by Paul McBeth. Image from Artificial Photography on Unsplash.
