New Zealand’s S&P/NZX 50 index snapped a three-day decline, rising against the tide across much of Asia with heavyweights Infratil and Fisher & Paykel Healthcare both rallying into their annual results on Wednesday.
Earnings season continued today with Metro Performance Glass’s annual earnings falling at the lower end of its guidance range, while Asset Plus returned to positive earnings, even if its bottom line was knocked by revaluations. And rural services firm Allied Farmers upgraded its earnings forecast.
Telco Vital surged on an upcoming takeover coming from Christchurch communications firm Tait International.
Meanwhile, the kiwi dollar came off the boil ahead of the Reserve Bank’s expected rate cut tomorrow, although the Nikkei was rattled by comments from the Bank of Japan governor Kauo Ueda that more interest rate hikes could be on the cards for the world’s fifth biggest economy.
Against the grain
The NZX50 rose 35.11 points, or 0.3%, to 12,582.33, with 23 stocks gaining, 18 falling and nine unchanged. Turnover across the main board was $104.3 million.
New Zealand was one of the better performers across Asia, as the Nikkei 225 index slipped 0.1% after Bank of Japan governor Kauo Ueda said the central bank is looking at more interest rate hikes even as inflation gets closer to target.
The kiwi fell to 85.49 yen at 5pm in Auckland from 85.89 yen.
New Zealand’s Reserve Bank is due to review monetary policy on Wednesday and is widely expected to cut the official cash rate a quarter-point to 3.25%. Economists are more divided beyond that as to how aggressively further cuts will be. The kiwi traded at 59.78 US cents at 5pm from 60 cents at 7am and 60.24 cents yesterday.
Fisher & Paykel Healthcare and Infratil paced gains on the market ahead of their annual results scheduled tomorrow. F&P Healthcare rose 1.5% to $36.63 while Infratil advanced 1.4% to $11.27.
Red sheds
Warehouse Group led the benchmark index higher, climbing 5.8% to 91 cents on an admittedly light volume of just 8,500 shares.
The retailer’s future in the NZX50 has been questioned in recent weeks ahead of the upcoming June rebalancing, and Forsyth Barr analyst Matthew Leach today said he didn’t anticipate any changes to the index’s make-up in the next review.
“Delegat Group currently ranks above Warehouse Group by market-cap, but because Delegat just fails the liquidity requirements, we believe it is no longer eligible and hence omitted from the overall ranking calculations,” Leach said in a note. “This allows Warehouse to sit just inside the exclusion zone and remain safe.”
Delegat increased 0.3% to $3.88.
Forsyth Barr’s Leach also noted Vulcan Steel – which rose 2.8% to $7.30 today – was on liquidity watch and at risk of being replaced by Briscoe Group, which slipped 0.2% to $4.85.
Those are borderline calls, and Leach is more confident that SkyCity Entertainment Group will leave the NZX20 and be replaced by Gentrack. SkyCity fell 2.1% to 95 cents, hitting a record low 93 cents during the session, while Gentrack edged up 0.1% to $11.56.
Red ledgers
KMD Brands posted the biggest decline on the benchmark index, falling 3.2% to 30 cents, while Fletcher Building dropped 3.1% to $3.14.
Precinct Properties NZ was the most heavily traded stock with a volume of 3.4 million shares, as it slipped 0.9% to $1.15.
Sanford was unchanged at $5.40 after shedding rights to a 5 cent dividend.
Eroad extended its rally for a fourth day, climbing 6.5% to $1.14, while Allied Farmers was unchanged at 75 cents after upgrading its earnings outlook.
Metro Performance Glass fell 1.8%, or 0.1 of a cent, to 5.2 cents after reporting earnings at the lower end of guidance, while Asset Plus was unchanged at 19.1 cents after generating positive adjusted funds from operations.
Telco minnow Vital surged 45% to 40 cents after private Christchurch communications firm Tait International said it plans to mount a formal takeover bid at 45 cents per share. It intends to lodge a formal notice next week.
Reporting by Paul McBeth. Image from Curious News.
