NZX50 hits record as investors eye US-China trade deal

The S&P/NZX 50 Index broke new ground as investors await the signing of the preliminary US-China trade deal. Gentrack slumped as a potential major customer backed out of a deal.

The NZX50 rose as high as 11,693.46 and ended the day at 11,676.67, up 51.54 points, or 0.4 per cent. Within the index, 28 stocks rose, 16 fell, and six were unchanged. Turnover was $181.3 million.

China's Vice Premier Liu He is scheduled to sign the first stage of the trade agreement in Washington overnight, although US Treasury Secretary Steven Mnuchin said the US will keep tariffs in place until the second tranche is signed.

"The clearing of trade clouds is a key factor in the recent stronger performances in risk assets," CMC chief markets strategist Michael McCarthy said in a note. "However, event risk over the next 24 hours is significant, and there was little appetite to push shares and industrial commodity prices any higher."

New Zealand, Australian and Vietnamese markets were the only ones in positive territory across Asia as investors weighed up Mnuchin's comments.

Stuart Williams, head of equities at Nikko Asset Management, said the summer holiday continued to affect the local market.

"There's still a lot of people away here and if there's money being deployed in New Zealand, there's not a lot of people to respond to it," he said.

"People are a bit reluctant to be selling things at the moment, because selling things didn't prove to be a great strategy last year."

The local market was led higher by companies paying reliable dividends, which are a hallmark of the NZX50. Kiwi Property Group rose 2.3 per cent to $1.57 on a volume of 1.9 million shares, less than its 90-day average of 1.6 million, Argosy Property rose 1.8 per cent to $1.42, and Goodman Property Trust was up 1.8 per cent at a record $2.30.

Fisher & Paykel Healthcare, New Zealand's second-biggest listed company, rose 1.7 per cent to $22.22 on a volume of 1.4 million shares, more than twice its 691,000 average.

Williams said healthcare is a popular sector internationally, but F&P Healthcare's price-to-earnings ratio - almost 46 times on a forward earnings basis according to Refinitiv data – made it difficult for local investors to justify buying.

Gentrack sank 26.7 per cent to $2.89, the lowest since August 2016, and was the most traded stock on a volume of 4.7 million shares. It typically trades on a volume of 178,000.

The utilities software developer warned that market conditions were worse than expected and that British electricity firm E.ON had decided to suspend plans to roll out Gentrack's billing platform. The company said it will update its earnings guidance in the next week.

Meridian Energy increased 0.2 per cent to $5.16 with 1.8 million shares traded. Meridian's South Island hydro lakes saw more than twice the usual water inflows in December and its Waitaki catchment storage was 136 per cent of historical average at the end of December.

National electricity demand was up 4.9 per cent in December on a year earlier while Meridian's retail sales volumes for the month were 45 per cent higher than a year earlier. Meridian said most of the rainfall in the South Island was west of the divide, so agricultural demand for electricity to run irrigation systems was very strong. As well, Meridian's sales through the corporate and industrial channels were much higher than a year earlier, largely because it had more generation available to sell.

Contact Energy fell 1.2 per cent to $7.34 on a volume of 1.1 million, while Genesis Energy rose 1.9 per cent to $3.23. Mercury NZ increased 1 per cent to $5.25.

Metlifecare fell 0.2 per cent to $6.88, still shy of its $7 takeover offer, on a volume of 3.1 million shares.

Of other companies trading on volumes of more than a million shares, Fletcher Building fell 0.4 per cent to $5.28, Spark New Zealand decreased 1 per cent to $4.505, Summerset Group increased 0.1 per cent to $8.72, Z Energy rose 1.6 per cent to $4.59, and Auckland International Airport rose 1 per cent to $9.08.

Outside the benchmark index, PaySauce rose 2.2 per cent to 94 cents. The payroll software provider said it almost doubled annual recurring revenue in the December quarter.