MARKET CLOSE: NZ shares follow Asian rally; exporters F&P Health, A2 gain

Monday 17th December 2018

New Zealand shares rallied late in the trading session to follow Asian markets higher, led by export-focused firms including Fisher & Paykel Healthcare and A2 Milk.

The S&P/NZX 50 index increased 23.08 points, or 0.3 percent, to 8,745.59. Within the index, 18 stocks gained, 25 fell and seven were unchanged. Turnover was $132.3 million.

Stocks across Asia gained, as investors regained some optimism about efforts to cool the US-China trade stoush after China confirmed it will lower auto tariffs on US goods. The world's two biggest economies are working to a 90-day timeframe to find common ground and dial back tensions that have seen tit-for-tat tariffs imposed on exports.

"They've got 80 or so days to come to an agreement and I'm sure they'll be rolling out the Tweets about how positive everything is," said Greg Smith, head of research at Fat Prophets.

Exporters led gains on the domestic market, with F&P Healthcare, up 4.6 percent at $12.40 in average trading. A2 rose 1.9 percent to $10.95 on moderate volumes, while Scales Corp increased 1.2 percent to $4.32. National carrier Air New Zealand rose 2.3 percent to $3.09.

The late rally offset the negative tone for licensed lenders after the Reserve Bank's proposals to make them hold more capital on their books. Heartland Group dropped 4.6 percent to $1.45 on heavier than usual trading, while Australia & New Zealand Banking Group - which has a bigger exposure than the other Australian banks to New Zealand - fell 2.9 percent to $25.76. Westpac Banking Corp was down 1.3 percent to $26.

Smith said imposing stricter capital requirements will result in increased lending rates as the banks pass on the costs to borrowers, and will probably dent economic growth.

"The Australian and Australasian banks are among the strongest in the world," Smith said. "None went bust in the GFC."

Spark New Zealand was the most traded stock on a slightly busier volume of 3.3 million shares. It fell 1.2 percent to $4.20. Kiwi Property Group rose 3 percent to $1.385 on 2.5 million shares, twice its 90-day average. Meridian Energy increased 0.7 percent to $3.425 with 2.3 million shares traded.

Of other companies trading on volumes of 1 million shares or more, Trade Me was unchanged at $6.32, Auckland International Airport slipped 0.4 percent to $6.945, Contact Energy decreased 0.5 percent to $5.85, and Goodman Property Trust increased 1 percent to $1.57.

Sky Network Television fell 2 percent to $1.97, falling below $2 for the first time since it merged with Independent News Ltd in 2005.

Chorus was unchanged at $4.60 after it said average household broadband usage was up 35 percent in November from a year earlier.

Vital Healthcare Property Trust declined 0.7 percent to $2.075 ahead of its annual meeting on Thursday. Rebel investors are seeking to diminish the control of the trust's manager.

Mercury NZ decreased 0.6 percent to $3.53 after the company announced the sale of its Metrix smart metering business for $270 million. It will use some of the proceeds to repay debt.

Outside the benchmark index, PGG Wrightson fell 2 percent to 50 cents. Ngāi Tahu Capital took a direct stake in the rural services firm, ending its joint venture with Agria and Chinese agribusiness New Hope International.

TruScreen was unchanged at 18 cents in its first day of trading on the main board, having migrated from the NZAX.

(BusinessDesk)

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