The pre-election financial update – where medium-term unemployment and debt levels were bleak – failed to dampen the spirit of the rising New Zealand sharemarket.
The S&P/NZX 50 Index steadily rose 43.96 points or 0.37 per cent to 11,814.71 with 46.17 million shares worth $182.28 million changing hands. There were 68 gainers and 69 decliners over the whole market. The Australian market had a solid day, and at 5.45pm the S&P/ASX 200 was up 0.98 per cent to 5952.4.
Nigel Scott, investment adviser with Craigs Investment Partners, said the local market is in a holding pattern. "It is the quietest it's been since mid-March in terms of enquiries and activity. Investors are happy holding core shares for dividends, and re-cap stocks when interest rates are so low."
The Treasury's Pre-Election Economic and Fiscal Update indicated unemployment will reach its highest level of 7.8 per cent in March 2022 – overriding the expected 10 per cent. The Government's deficit this year is also lower than expected - $23 billion compared with the $28b outlined in the May Budget.
The deficit is expected to hit $12b in 2024 compared with the previous estimate of $5b. Net core Crown debt is forecast to peak at 55.3 per cent of gross domestic product (GDP) in the 2024 financial year
Caralee McLiesh, Treasury secretary, said "the near-term outlook is less negative; we have revised down our forecasts for long-term growth." ANZ economists were more colourful, saying "a colossal deterioration in the fiscal position is underway and economic headwinds will be with us for a long while yet."
The market is now awaiting the latest national GDP figures which are expected to show a 16 per cent drop since the late March nationwide lockdown – the biggest one-off fall in economic growth and proof that the country has entered a recession.
Pacesetter Fisher and Paykel Healthcare had a solid day, rising 37c to $33, while Mercury Energy was up 4.5c to $5.105 and New Zealand King Salmon increased 4c or 2.31 per cent to $1.77.
Mainfreight was down 44c to $46.05, Freightways lost 10c to $7.60 and Tourism Holdings slipped 4c to $2.16.
NZME continued its recovery, gaining 2c or 4.65 per cent to 45c. The share price has risen nearly 30 per cent since hitting 29c on August 24 and is nearing its 12-month high of 45.5c set on October 8 last year.
Online travel provider Serko , with new chairwoman Claudia Batten in the seat, ploughed ahead 26c or 5.86 per cent to $4.70, reaching the price level achieved in February. Serko indicated at its annual meeting that it was expecting an expanded deal with Booking.com. Serko is also benefiting from its new-found status as it moves into the NZX 50 on Friday, replacing New Zealand Refining.
Another Sky TV director has been buying up the network shares. Following chief executive Martin Stewart's recent purchase, Susan Paterson bought 125,000 shares at 15c each on-market on September 10 under the SM Taylor Family Trust, paying $18,750. Sky TV's share price was down 0.56c or 3.18 per cent to 15.2c.
Spark New Zealand produced its new three-year strategy (2021-23) that focuses on 5G and its market opportunities, and its share price rose 5c to $4.80.
Software and services investment company Enprise Group , which operates on both sides of the Tasman, rose 26c or 30.59 per cent to $1.11 after reporting an improved financial result. Enprise's profit climbed 235 per cent to $1.28m for the 15 months ending June and revenue was up 85 per cent to $12.4m. It is paying a final dividend of 2c a share on October 23.