Government energy reforms spark NZX rally, Meridian leads gentailer gains – Market close

Share prices for the big four gentailers rose after the Government's announcement on energy sector reforms. Photo / Greg Bowker

The New Zealand sharemarket rose on Wednesday as the big four gentailers rallied after the Government’s announcement of energy sector reforms.

The S&P/NZX 50 Index closed up 1.07% or 141.629 points, rising to 13,433.99 after 46 million shares worth $181.2 million were traded.

The S&P/NZX 20 index closed at 7721.78 points, up 1.07%, while the S&P/NZX 10 index ended the day at 12,869.12, rising 1.16%.

There were 98 gainers on the main board and 48 decliners.

The Government, in response to a long-awaited report from consultancy Frontier Economics, said it would open up the big three partially state-owned power generators to fresh capital and would look into the import of liquefied natural gas (LNG) to augment flagging gas reserves.

Craigs Investment Partners investment director Mark Lister said the whole sector would benefit.

“I think the key point is it’s positive developments for the sector and Meridian is already the biggest beneficiary because of potentially the dry year risk being mitigated,” Lister said.

“The commentary around funding of new generation development, that’s also seen as a positive for all of those three Government-owned entities.”

Meridian Energy’s share price rallied after the news, rising 4.67% or 26c to $5.83 after 2.56 million shares traded on turnover worth $14.8m.

The other majority Government-owned providers Genesis Energy and Mercury Energy were also on the up.

Genesis Energy’s share price rose 2.13% or 5c to $2.40, while Mercury Energy’s share price lifted 1.35% or 9c to $6.77.

Contact Energy, the only provider without Government ownership, also benefited from the news, climbing 8c or 0.88% to $9.18.

Elsewhere, the Fonterra Shareholders Fund fell 0.63% or 5c to $7.95 per unit.

Now the September quarter had finished, Lister said it was the fifth consecutive monthly rise for the New Zealand market dating back to May.

“The local market is up almost 12% since the end of April, so it hasn’t been too bad. In September the market was up 2.8%. So even though there’s still bad news coming out like the GDP report and a lot of doom and gloom, the market is still actually performing well.”

Overseas, the US Government officially shut down because of a stalemate on budget talks, the first shutdown in more than six years, causing US futures to fall.

The Dow finished at a fresh record on Tuesday, while major US equity indices veered in and out of negative territory throughout the day before finishing in the black. The Dow Jones Industrial Average was up 0.2% at 46,397.89.

Several federal government operations will freeze if there is no breakthrough. Talks between congressional leaders and US President Donald Trump concluded Tuesday without progress.

“The market seems to be ignoring the fact that we’re looking at a potential shutdown,” said Art Hogan of B. Riley Wealth Management.

Analysts say a shutdown will not significantly affect the US economy unless it is prolonged. While some activity would be curtailed, the expectation is that there would be a bounce when the Government reopened.

But a closure would delay the release of key economic data, including the September jobs report, which is set to come out Friday.

– Additional reporting AFP

Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.