There is an old saying on the market: "Sell in May, and go away." It has traditionally been a soft month of the year and the phenomenon is certainly playing out on the New Zealand sharemarket.
The S&P/NZX 50 Index drifted aimlessly, finishing just ahead at 12,428.62, up 18.14 points or 0.15 per cent on light trading. The index reached an intraday high of 12,466.24 in the morning but tapered off in the afternoon before another push in the last hour of trading.
There were 78 gainers and 60 decliners over the whole market on volume of 45.8 million share transactions worth $123.59 million.
The index has fallen 2.5 per cent this month and more than 5 per cent for the year to date, under-performing other western global markets. The Australian ASX 200 Index is up more than 7 per cent to date, and the Dow Jones Industrial Average on Wall Street has risen more than 12 per cent, in NZ dollars.
Dan Stratful, investment adviser with Forsyth Barr, said the local market is lacklustre, even a little volatile. "We are a low growth, high yield market and perhaps we are suffering more than others because of the perception of rising inflation and higher interest rates.
"Investors are faced with a dilemma – if they sell and take their profits, then they are faced with bank term deposits of under 1 per cent. There is no real alternative," Stratful said. "All they can hope for is that the inflation fears recede and the market can finish the rest of the year on a good note."
Global marketer a2 Milk's share price continued its freefall, losing 20c or 3.47 per cent to $5.56. Asked if it becomes a takeover target at that price level, Stratful said: "I don't know about that. There has been some talk of it. But I'm waiting for the management to begin its share buy-back, as part of the company's capital management.
"It will be interesting for the market to see at what price they begin buying the shares on the market. The company's share price has been a falling knife, it has been for weeks, and it's tough to pick the bottom for a2 Milk."
Rival Reckitt Benckiser, the British consumer goods multi-national, is selling its China infant formula business, with a valuation of around $2.76 billion.
Market leader Fisher and Paykel Healthcare faced profit-taking, falling 58c or 1.73 per cent to $32.89. But the energy stocks had some life, on the back of improving hydro storage.
Meridian was up 8c to $5.32; Mercury gained 4c to $6.55 after reaching an intraday high of $6.70; Trustpower climbed 11c to $8.45; and Genesis gained 2c to $3.45.
Meridian said national hydro storage improved from 59 per cent to 67 per cent in the month to May 14, and its April inflows were 87 per cent of historical average. Meridian's New Zealand retail sales last month were 36.9 per cent higher than April last year, when the country was in Alert Level 4 lockdown.
Trustpower, the country's fifth largest electricity generator, told the market it was forecasting earnings of $200m-$225m for the present 2022 financial year. Its capital expenditure for the year will be $43m-$59m.
Ryman Healthcare had a healthy recovery, rising 30c or 2.07 per cent to $14.80; fellow retirement village operator Oceania Healthcare increased 5c or 3.79 per cent to $1.37; Auckland International Airport was up 11c to $7.52; Skellerup Holdings picked up 9c or 1.95 per cent to $4.70; and Freightways collected 11c to $11.35.
Port of Tauranga, picking up more business from Ports of Auckland, gained 12c to $7.46; Serko surged 31c or 4.85 per cent to $6.70; and Scales Corporation increased 7c to $4.59.
Insurer Tower fell a further 6c or 7.41 per cent to 75c after downgrading its 2021 net profit to $25m-$27m. Other decliners were Synlait Milk, down 7c or 2.33 per cent to $293; Scott Technology falling 11c or 458 per cent to $2.29; and Comvita down 8c or 2.44 per cent to $3.20.
Investore Property, owner of large format retail buildings including Countdown and Bunnings, had a massive increase in net profit from $28.6m to $161.26m for the year ending March, thanks to a $139.3m revaluation gain on its $1 billion portfolio.
Investore's net rental income increased 16.1 per cent to $7.7m to $55.81m, and its share price slipped 2c to $2.06. The company is paying a quarterly dividend of 1.9c a share on June 2.
Fellow property companies Argosy rose 7c or 4.73 per cent to $1.55, and Property for Industry gained 2.5c to $2.855.