Market close: NZ shares plunge as Auckland Covid case unnerves investors

Over the whole market, there were 106 decliners and just 39 gainers. Photo / NZME

The new community case of Covid-19 in Auckland unnerved the New Zealand sharemarket which plunged more than half a per cent when the news broke mid-afternoon. The NZ dollar also took a dive.

The S&P/NZX 50 Index was trading steadily until 3pm when it fell 100 points to close at 12,635.32 down 84.82 points or 0.67 per cent. The index had reached an intraday high of 12,813.32.

Over the whole market, there were 106 decliners and just 39 gainers – one of them market leader Fisher and Paykel Healthcare – and volume was heavy at 67.79 million share transactions worth $251.29 million.

The NZ dollar fell from US70.34c to US69.44c against the American greenback, and there is now a question about whether the Reserve Bank will raise the official cash rate (OCR) this week.

Matt Goodson, managing director of Salt Funds Management, said the market turned down sharply on the news of the Covid community case, but the fall was partly sheltered by the knee-jerk reaction to buy Fisher and Paykel Healthcare.

"The lesson last time around is that a number of businesses bounced back strongly (from a lockdown) and that was mainly because the economy was awash with printed money from the Reserve Bank.

"It does put a question mark on the OCR move by the bank, but inflationary pressure is a very real thing," Goodson said. "It's a very interesting situation for the government, and it does highlight the unfortunate slowness of the vaccination programme. (A lockdown) will disrupt a lot of plans."

Wednesday was meant to be a big day for the market, with Fletcher Building, Ebos Group and Spark reporting their annual results, and Fisher and Paykel Healthcare, Serko and Turners Automotive holding their annual meetings.

"It was going to be an interesting day," said Goodson, "but it may now be overshadowed by other (Covid-related) events. That's very unfortunate."

Serko and Fisher and Paykel Healthcare quickly told the market and their shareholders that the annual meeting will now be held online.

Fisher and Paykel Healthcare, the global medical devices supplier,
rose $1.41 or 4.54 per cent to $32.46 on trade worth $23.73m.

Ebos Group increased 20c to $31.40; Serko was up 5c to $7; Fonterra Shareholders' Fund gained 7c or 1.89 per cent to $3.77; Chorus collected 7c to $6.40; and My Food Bag picked up 3c or 2.36 per cent to $1.30.

There were some sharp turnarounds. Fletcher Building was down 9c to $7.75 after reaching $7.98 during the day; Summerset Group Holdings went from $13.33 to $12.86, down 33c or 2.5 per cent; and Ryman Healthcare declined 19c to $14.21.

Rural services company PGG Wrightson reached $3.79 but finished at $3.60, down 7c or 1.91 per cent, after reporting a strong result for the 2021 financial year ending June. Net profit climbed 225 per cent to $22.7m on revenue of 847.81m, up 7.6 per cent, and the company is paying a final dividend of 16c a share on October 4.

Infratil was down 18c or 2.45 per cent to $7.16; Mainfreight lost $1.80 or 2.12 per cent to $83; Restaurant Brands was down 49c or 3.16 per cent to $15; SkyCity Entertainment declined 10c or 3.13 per cent to $3.10; Freightways decreased 26c or 2.03 per cent to $12.54; and a2 Milk fell 33c or 4.68 per cent to $6.72 after takeover talk quietened down.

Mercury Energy fell 7c to $6.625 following a mixed result for the year ending June. But it reached an intraday high of $6.93 before the Covid community case announcement.

Mercury's net profit was down 32.5 per cent to $141m on revenue of $2.04 billion, up 15.7 per cent, and operating earnings (ebitdaf) slipped 6 per cent to $463m, mainly because of low inflows into Lake Taupo and an unplanned outage at the Kawerau geothermal power station. It is paying a final dividend of 10.2c a share on September 30.

For the 2022 financial year Mercury, which bought the New Zealand operations of Tilt Renewables, is forecasting ebitdaf of $590m and total dividend of 20c a share, a 17.6 per cent increase.

Contact Energy declined 8c to $8.05, and Meridian went under $5 for the first time in 10 months, closing down 5c at $4.98.

The property stocks had a down day. Precinct Properties declined 7c or 4.15 per cent to $1.615; Goodman Property Trust decreased 1.5c to $2.525; Vital Healthcare Property Trust shed 5c to $3.222; Kiwi Property lost 5c or 4.27 per cent to $1.12; Argosy dropped 1.5c to $1.595; and Stride Property Group fell 6c or 2.37 per cent to $2.47.

Stride told the market that its joint venture partner Industre Property had made $51.9m worth of purchases and committed developments, and Industre had completed $143m of acquisitions since it began in July last year. Its portfolio value was $645m.