Market close: Stocks headed for worst performance in 14 years

Photo / NZME

The New Zealand sharemarket is heading for its worst performance in 14 years after another down day just before Christmas – following a further big fall on Wall Street.

On the last shortened trading session before Christmas Day, the S&P/NZX 50 Index declined 29 points or 0.25 per cent to 11,494.96, though it recovered in the last hour after reaching an intraday low of 11,440.19.

There 81 decliners and 37 gainers over the whole market on low volume of 22.45 million share transactions worth $42.67 million. The trading was rescued by the sale of 4.32 million Smartshares NZ Cash exchange traded fund units worth $6.93m.

The NZX 50 index began the year at 13,033.77 points and has since fallen nearly 12 per cent. With just three trading days remaining in this eventful year, the index is careering towards its worst annual return since 2008 – when the market plunged 32.8 per cent during the global financial crisis.

Last year the market was down just 0.4 per cent, and in the Covid year of 2020 remarkably increased 13.92 per cent – after slumping nearly 30 per cent between March 3 and 23, from 12,083 to 8495 points (when the virus first struck).

So, over the past three years investors have seen an overall flat return from the market.

The top five gainers so far this year are Channel Infrastructure (up 51 per cent), Smartpay Holdings (47 per cent), MHM Automation (45 per cent), Gentrack (24 per cent), and a2 Milk (up 24.75 per cent).

Other solid performers have been Ventia Services gaining 24 per cent, Tourism Holdings nearly 19 per cent, Chorus 18 per cent and Spark 17 per cent.

The top five decliners are Eroad (down 81 per cent), Me Today (77 per cent), Trade Window and NZ King Salmon Investments (both 68 per cent), and Serko (down 66 per cent), three of them being technology stocks.

My Food Bag and Pacific Edge are down 63 per cent and 61 per cent respectively. Ryman Healthcare and Arvida Group have fallen 54 per cent and 40 per cent in the hard-hit retirement village sector.

Shane Solly, portfolio manager with Harbour Asset Management, said the year on the market has been volatile and quite challenging – “there’s no other way to describe it”.

“You had the massive financial stimulus in 2020 and then came the unwinding and hangover this year,” he said.

“You’ve seen a lot of macroeconomic forces in play and central banks driving monetary policy more than they normally do.

“Hopefully, you will see some balance coming into the markets next year and company fundamentals becoming more important. Investors will be focused on corporate earnings and the risk of downgrades,” Solly said.

Since late August last year, the official cash rate has increased 4 per cent from 0.25 per cent to 4.25 per cent as the Reserve Bank moved hard to tame inflation – and the bank intends to go further. The fast-rising interest rate rises caused considerable investor uncertainty.

“The speed of the rate hikes causing parts of the economy to slow down is unprecedented in modern times,” said Solly, “and the central banks feel they are not done yet.”

On the last day of trading before Christmas, Freightways fell 49c or 4.9 per cent to $9.51; a2 Milk shed 5c to $7.18; Fletcher Building was down 5c to $4.73; Mainfreight declined 30c to $67.50; and Air New Zealand was down 1.5c or 1.91 per cent to 77c.

In the energy sector, Meridian was down 17c or 3.24 per cent to $5.08; and Mercury was up 12c or 2.17 per cent to $5.64.

In the retirement sector, Ryman Healthcare declined a further 11c or 1.95 per cent to $5.52; Summerset Group was down 4c to $9.06; and Oceania Healthcare slipped 1c to 77c.

Delegat Group was down 10c to $9.80; NZME declined 4c or 3.48 per cent to $1.11; Gentrack shed 4c to $2.60; Vista Group decreased 4c or 2.68 per cent to $1.45; and Michael Hill was down 3c or 2.56 per cent to $1.14.

Napier Port shed 8c or 2.76 per cent to $2.82; Millennium & Copthorne Hotels NZ was down 5c or 2.63 per cent to $1.85; Allied Farmers declined 2c or 2.67 per cent to 73c; and Radius Residential Care was down 1.5c or 5.56 per cent to 25.5c.

Spark was up 7c to $5.43; Ventia Services increased 10c or 3.7 per cent to $2.80; My Food Bag rebounded 1.5c or 5.56 per cent to 40.5c; Solution Dynamics rose 10c or 4.55 per cent to $2.30; and Greenfern Industries added 0.003c or 3.3 per cent to 9.4c.

Eroad, up 2c or 2.15 per cent to 95c, told the market it is paying $19.5m contingency to the Coretex vendors following their merger – in the form of $8.5m cash and 1.83 million new shares at $6 a share.

NZ Automotive Investments, down 1c or 2.86 per cent to 34c, has had its retail trade finance facility of $6m extended from December 31 to April 30. The motor finance facility with lending limit of $1.8m will expire on October 1, and the company is in discussions with alternate lenders.

On Wall Street struck by recessionary fears, the Dow Jones Industrial Average decreased 1.05 per cent to 33,027.49 points; S&P 500 declined 1.45 per cent to 3822.39; and Nasdaq Composite fell 2.18 per cent to 10,476.12 – down 33 per cent for the year.