Chicago Fed boss jets in with welcome message

Federal Reserve Chair Janet Yellen, centre, and Federal Reserve Bank of Chicago President and CEO Charles Evans. Photo / Getty

Chicago Federal Reserve president Charles Evans jetted into Auckland this week and delivered a message which, when boiled down to its essence, was broadly positive for local sharemarket investors.

Addressing a room full of financial analysts at a CFA Society lunch event, he said the outlook for the world's biggest economy was "sound" and the first hike in US interest rates since last December could soon be on the way.

But even so, he said it was his view that "we will be in a low-growth, low interest rate environment" for some time.

Low rates have been contributing to a bull run in equity markets - particularly New Zealand's, which has a global reputation as a solid source of dividends for income-starved investors.

Markets have been on edge over when the next Fed hike may take place and how stocks will react to tightening US monetary policy.

"Dr Evans' expectation of rates staying lower for longer supports the local equity market, which is tilted to interest rate sensitive stocks such as utility, infrastructure and property stocks," said Shane Solly, of Harbour Asset Management.

"But in the near-term these stocks are expensive and will remain volatile around US Fed ... comments."

After his speech, Evans said he "would be fine" with the Fed raising rates once this year, most likely in December.

Still dumping

Air New Zealand management share trading is continuing to send a potential sell signal on the airline's stock.

As noted by Stock Takes last month, a number of the carrier's top executives have been offloading a significant parcels of shares in recent months.

A flurry of trading occurred in April and early May, when staff including CEO Christopher Luxon, chief operations officer Bruce Parton and chief pilot David Morgan sold over $5m worth of stock.

These trades have been taking place against the backdrop of a less rosy outlook for the national carrier's current (2017) financial year - partly as a result of increased competition.

This week, a notice filed to the NZX showed Air NZ chief marketing and customer officer Mike Tod exercised 1,101,947 options to acquire 405,743 shares on September 26.

He immediately offloaded almost all of the shares for $726,983, according to the notice.

Air New Zealand shares, which have declined around 30 per cent this year, are trading this afternoon at $1.775.

Stumped by slump

There would appear to be no rhyme or reason to a recent slump in Tegel's share price.

Management at New Zealand's biggest chicken producer may well have breathed a collective sigh of relief earlier this week after the stock rose back above the $1.55 IPO price after briefly dipping into territory no listed company likes to tread, to close as low as $1.50, last week.

But the reprieve wasn't to last and the shares, which floated in May, have since fallen again to recently trade back at $1.50, well below the $1.78 closing high they reached on August 19.

And that's despite the company's last price sensitive announcement being positive news - that the company had managed to secure access for New Zealand raw chicken products to the A$1.7 billion ($1.8b) Australian poultry market.

The company had previously been limited to exporting only fully cooked products across the Tasman.

Analysts have speculated that an upcoming Australian IPO of Tegel competitor Inghams could be playing a role in the New Zealand firm's share price weakness.

Institutions, so the theory goes, could be selling Tegel shares to make way for Inghams in their portfolios.

Meanwhile, some traders could be gaming the market through selling Tegel shares in order to bring that company's share price down.

"If you're trying to get Inghams shares in the IPO for cheaper then the best way to do that is to have its main comparative [stock] looking a little bit cheaper," Mark Lister, of Craigs Investment Partners, told Stock Takes.