Market close: NZ stocks end flat as investors await Fletcher, election result

Fletcher Building remains in a trading halt. Photo / Natalie Slade

Uncertainty surrounding Fletcher Building and the upcoming general election made for a quiet day’s trading on the sharemarket, on light volume.

The S&P/NZX50 index finished at 11,292.580, down 13.86 points or 0.12 per cent.

Turnover was worth $91.03 million and there were 79 gainers and 47 falls among the 185 stocks traded.

Most of the talk in the market was around Fletcher Building (FBU), which went into a trading halt on Wednesday pending more clarity around a claim from Western Australia’s biggest home builder, BGC, over plumbing failures arising from use of Iplex Australia pipes. Iplex is part of FBU.

BGC believes leaking Iplex pipes in the state warrant a product recall.

“We found BGC’s presentation to be credible and believe FBU should take the results seriously,” brokers Forsyth Barr said in a research note.

“FBU continues to state its own investigations point to an install issue, but it has not yet produced the same level of evidence,” it said.

“We expect a negative share price reaction when FBU starts trading with the severity dependent on the credibility of FBU’s rebuttal.”

FBU had previously allowed for A$15m ($16m) in possible claims arising from the issue.

Salt Funds managing director Matt Goodson said the FBU issue and the election had overhung a quiet and directionless day on the market.

In the meantime, markets were taking comfort from comments from senior Federal Reserve members, who signalled that the Fed’s open market committee was now in a position to hold US rates steady while the central bank observes incoming data.

“Views around the Fed are evolving,” Goodson said, noting the Fed’s “dot-plot” forecast still has one more hike pencilled in for later this year.

Air New Zealand dropped by half a cent to 70c after issuing what Goodson said was a disappointing earnings update.

The airline still holds about $200m in Covid-related credits and continues to increase efforts to contact customers to raise awareness and increase redemption.

“It was a tad disappointing when one accounts for the fact that included a [$45m] credit from Covid freebies that are unlikely to be used,” Goodson said.

“The second half will be a lot harder for them because the full impact of the Pratt and Whitney engines issue will start to affect them,” he said.

Auckland International Airport ended up 7c at $7.93 and Mainfreight dropped 95c or 1.5 per cent to $62.60.

Software company Gentrack gained 13c to $5.23.

Goodson said both Turners Automotive - steady at $4.20 - and Gentrack are being talked about as possible candidates for inclusion in the S&P/NZX50 index, come December’s review.

Dairy company Synlait - up 3c at $1.36 - and cancer diagnostics company Pacific Edge - down 0.7c at 10.05c - are expected to drop out of the index.

Argosy Property was steady at $1.14 after announcing that it expects to record an interim portfolio revaluation loss of $49.5m, a 2.3 per cent decrease on book values immediately prior to the revaluation.

“For Argosy, it was the same story as the other property companies,” Goodson said.

“You have higher rent but that’s not enough to offset the high cap rates, so we are seeing valuation declines,” he said.

The Real Estate Institute’s (REINZ) September report showed market prices are stabilising, with increased sales and fewer days to sell a property.

The House Price Index, which measures the changing value of properties, rose 0.7 per cent in September, but was down 3.3 per cent on the year earlier.

Westpac said the update reinforced its view that the housing market had found a base.

“However, the housing market certainly isn’t roaring away just yet.”

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.