New Zealand’s S&P/NZX 50 index extended its gains in a mixed day across Asia, as sluggish economic data domestically and in the US raises the prospect that the Reserve Bank will need to keep cutting the benchmark interest rate.
Ryman Healthcare bounced back from the rugged time it’s had of late while Ebos Group’s broader shareholder base gave it licence to go higher.
And outside the benchmark index, minnows Metro Performance Glass and Vital rallied amid some heightened merger and acquisition activity, even if it wasn’t welcomed.
Across the Tasman, Commonwealth Bank of Australia extended its march higher, having topped a market value of A$300 billion for the first time.
Going up?
The NZX50 rose 82.44 points, or 0.7%, to 12,577.15, with 28 stocks gaining, 15 declining, and seven unchanged. Turnover across the main board was $156.4 million.
That was in a mixed day for Asia, with Australia’s S&P/ASX 200 index nudging down 0.1% in late trading and Japan’s Nikkei 225 index slipping 0.6%, while Hong Kong’s Hang Seng rose 0.5%.
CBA edged up 0.1% to A$181.22 on the ASX, with Australia’s biggest lender continuing to defy sceptics as it crossed the A$300 billion market capitalisation mark for the first time today. Meanwhile, the dual-listed lenders were both weaker on the NZX, with Westpac Banking Corp down 0.7% to $35.46 and ANZ Group Holdings declining 0.5% to $31.64.
The local market followed Wall Street higher, where softer services activity and employment figures raised the prospect of a rate cut by the US Federal Reserve, something Devon Funds Management’s head of retail Greg Smith said was a similar dynamic in New Zealand.
“Every bit of weak economic data we get increases the case of further rate cuts to go below 3%,” Smith said.
The yield on New Zealand’s 10-year government bond slipped 1 basis point to 4.55% today, adding to its 6 point decline on Wednesday. The kiwi dollar traded at 60.32 US cents at 5pm in Auckland from 59.97 cents yesterday.
Property companies, typically held for the reliable dividends and linked closely to interest rates, were among the stronger performers today. Investore Property gained 3.6% to $1.16, Argosy Property rose 2.9% to $1.08 and Goodman Property Trust advanced 2.4% to $1.96.
Ryman led the benchmark index higher, climbing 6.3% to $2.18, and recovering from its recent 14-year low.
Warehouse Group rose 2.1% to 96 cents after the Commerce Commission outlined proposals to tweak the grocery code to stoke more competition in the sector.
Meanwhile, Vulcan Steel posted the biggest decline on the NZX50, falling 3.7% to $7.04, while KMD Brands fell 3.3% to 29 cents and Serko declined 2.4% to $2.83.
Tough talk
Outside the benchmark index, Metroglass jumped 14%, or 0.7 of a cent, to 5.7 cents after rival Viridian NZ – owned by private equity firm Crescent Capital – lodged its application to by the glassmaker with the Commerce Commission. Metroglass has already rejected the private equity firm’s overtures, saying they were highly conditional and not worth investigating further.
And telecommunications firm Vital rose 6.3% to 42 cents after Tait International lodged its formal notice of takeover, offering to buy the firm for $18.7 million, or 45 cents per share. Vital’s board will make a recommendation on the bid once the formal offer is made, and a target company statement produced with an independent adviser’s valuation.
Elsewhere in deal-land, Virgin Australia’s initial public offering across the Tasman is looking increasingly likely to take off, with reports that fund managers have committed to the A$685 million raising at A$2.90 a share.
“With oil prices having come off, passenger demand still strong, and airfares quite high, it’s a tailor-made situation for a private equity company to get out,” Devon’s Smith said.
Air New Zealand was unchanged at $59 cents on the NZX, while ASX-listed Qantas Airways fell 2.8%.
Reporting by Paul McBeth. Image from Aleksandr Popov on Unsplash.
