New Zealand’s S&P/NZX 50 index joined the broadly stronger tone across Asia as investors took their cue from a strong end for Wall Street on Friday and the prospect of the Reserve Bank of Australia cutting its key rate on Tuesday sending the S&P/ASX 200 to a new record.
Yield plays including Meridian Energy, Vector, Kiwi Property Group and Precinct Properties NZ were among the day’s gainers, with New Zealand’s Reserve Bank expected to follow suit in cutting rates when it reviews the official cash rate next week.
Meanwhile, New Zealand’s corporate earnings season is slowly getting into gear with PGG Wrightson rallying ahead of its annual result on Tuesday.
And would-be miner Santana Minerals is raising A$63 million to help fund its dreams of tapping a Central Otago vein, while Metro Performance Glass is calling a special meeting seeking approval for a recapitalisation plan giving control of the company to new major shareholder, Amari Metals Australia.
Weekly green
The NZX50 rose 78.86 points, or 0.6%, to 12,923.49, with 28 stocks gaining, 17 declining, and five unchanged. Turnover was a relatively quiet $105.5 million across the main board, with Japanese markets closed for the Mountain Day holiday.
Stock markets across Asia were broadly stronger, following a strong lead from Wall Street on Friday. Australia’s ASX200 was up 0.3% in late trading, hitting yet another record as miners paced gains, with Rio Tinto and BHP tracking a higher iron ore price and lithium explorers buoyed by the suspension of a major Chinese site.
The prospect of the Reserve Bank of Australia cutting the target cash rate a quarter-point to 3.6% at tomorrow’s policy review also kept investors upbeat. New Zealand’s Reserve Bank is expected to follow suit and cut the OCR 25 basis points at next week’s review.
Companies held for their dividends were the main drivers of the NZX50’s gain, with energy companies and commercial landlords all stronger on the day.
Meridian Energy rose 2% to $4.50, lines company Vector increased 2% to $4.50, Contact Energy increased 0.9% to $9.24, Genesis Energy advanced 0.6% to $2.38 and Mercury NZ edged up 0.2% to $6.23.
Forsyth Barr analysts Andrew Harvey-Green and Hugh Lockwood said in a note to clients they expect the upcoming earnings season to show an 8% decline in operating earnings for the generator-retailers, with most of the pain felt by Meridian and Mercury.
“A key theme during the reporting season is likely the ongoing political and regulatory pressure, with the fallout from winter 2024 still front of mind,” the analysts said. “We are not anticipating any material company announcements, with the proximity of investor days limiting what the companies will want to say.”
Among property companies to gain on the day, Kiwi Property rose 1.6% to 98 cents, Precinct increased 1.2% to $1.245, Vital Healthcare Property Trust increased 1% to $1.99 and Argosy Property climbed 0.9% to $1.15.
Fletcher Building led the index higher, up 2.4% to $3.02.
Yes, no, maybe
Spark New Zealand was the most heavily traded stock on a volume of 3.3 million, rising 0.6% to $2.605, acknowledging a report in The Australian Financial review putting Pacific Equity Partners in the box seat to buy a controlling stake of the telco’s data centre unit, and confirming the process is continuing.
Fonterra Shareholders’ Fund units advanced 1.8% to $7.18, with the AFR’s Street Talk column also reporting the dairy exporter has granted exclusivity to Lactalis as it gets closer to selling its Mainland consumer business.
Scales Corp posted the biggest decline on the NZX50, falling 2.5% to $4.62, while KMD Brands declined 2% to 25 cents and a2 Milk Co slipped 1.8% to $8.41.
Outside the benchmark index, PGG Wrightson jumped 4.2% to a 17-month high $2.46 ahead of tomorrow’s annual result, which is expected to show a strong end to the financial year for the rural services firm.
Eroad continued its march higher, rising 7.2% to $2.09.
Mining hopeful Santana resumed trading today after saying it plans to raise A$60 million in a fully underwritten placement to institutional investors and another A$3 million through a share purchase plan at a 7.9% discount, with the funds to accelerate the development of the site near Cromwell in Central Otago. The dual-listed shares fell 1.5% to 67 cents on the NZX.
And MetroGlass dropped 20%, or 1 cent, to 4 cents after calling a special meeting outlining the details of a planned recapitalisation, which will raise between $15 million and $23.9 million, giving Amari a controlling stake of the company.
Reporting by Paul McBeth. Image from Curious News.
