NZ shares gains in heavy trading on quarterly index reweighting

Gentrack CEO Ian Black. Photo / Supplied

New Zealand shares rose in heavy trading late in the day as investors adjusted for the reweighting of several major indices. Utilities and property companies offering reliable dividends remained in vogue.

The S&P/NZX 50 Index increased 36.53 points, or 0.4 per cent, to 10,327.29. Within the index, 35 stocks rose, 11 stocks fell, and four were unchanged. Turnover was $294.7 million. Of that, A2 Milk accounted for $34.6m, Contact Energy $31.4m, and Spark New Zealand $26.9m.

Some 62.1 million shares changed hands, about twice the 30.5 million 90-day average, with investors reworking their portfolios to cater to the quarterly rebalance of the S&P/NZX Indices and FTSE Russell. NZX extended the adjustment period by 15 minutes to cater for the heightened activity.

David Price, a broker at Forsyth Barr, said most investors were waiting for the index reweightings at the end of the day.

"The market's just marking time ahead of what will be a relatively large change," he said before trading closed.

Spark was the most traded stock on a volume of 6.8 million shares, more than its 5.4 million average. It fell 0.8 per cent to $3.96.

Utilities and property companies were among the most traded stocks, with Kiwi Property Group up 1.3 per cent at $1.61 on a volume of 5.3 million shares. Meridian Energy rose 0.2 per cent to $4.73 on a volume of 5.1 million shares, Precinct Properties New Zealand increased 2.4 per cent to $1.74 on 4.8 million shares, and Contact Energy advanced 0.5 per cent to $7.52 on 4.2 million.

The local market outperformed most of Asia, and the benchmark NZX50 has been trading near a record level for most of this year. The dominance of companies paying reliable dividends has been an attraction for international investors at a time when global interest rates remain low. The NZX50 is the most expensive market across Asia at a forward price-to-earnings ratio of 22.79, higher than second-placed Shanghai Shenzhen CSI 300's forward P/E of 20.75.

A2 Milk fell 2 per cent to $14.02 on a volume of 2.5 million shares, about three-times its average. The milk marketing firm noted an announcement by China's State Administration of Market Regulation that it will increase its focus on supervision and enforcement of e-commerce rules. A2's Chinese sales have been a beneficiary of the unofficial 'daigou' channels.

Of other companies trading on volumes of more than 2 million shares, Infratil jumped 3.8 per cent to $3.79, Fletcher Building increased 0.6 per cent to $5.43, Genesis Energy advanced 2.8 per cent to $3.29, Air New Zealand fell 0.2 per cent to $2.685, and Auckland International Airport increased 0.4 per cent to $9.235.

Of companies trading on volumes of more than a million shares, SkyCity Entertainment rose 0.8 per cent to $3.80, Goodman Property Trust increased 1.9 per cent to $1.93, Argosy Property rose 0.7 per cent to $1.355, Z Energy was up 0.7 per cent at $6.12, Mercury NZ climbed 3.4 per cent to $4.25, New Zealand Refining increased 1.5 per cent to $2.07, Chorus advanced 1.5 per cent to $5.92, and Heartland Group Holdings was up 1.2 per cent at $1.65.

Gentrack led the market higher, up 6.5 per cent at $6.03 on just 50,000 shares, about half its usual volume. Global investment house BlackRock emerged as a substantial shareholder in the utilities software developer today, with a 5.1 per cent stake.

Fisher & Paykel Healthcare fell 2.1 per cent to $15.06, the day's biggest decline, on a volume of 968,000 shares, more than its 631,000 average. New Zealand's fourth-biggest listed company earns most of its revenue overseas, and its fortunes are often linked to fluctuations in the currency. The kiwi dollar was stronger today, closing at 65.96 US cents, on an expectation that the Federal Reserve will start cutting interest rates again.

Other exporters were also weaker, with Skellerup Holdings down 1.3 per cent at $2.37 on a volume of 807,000 shares, more than four times its average volume, Scales Corp decreased 0.8 per cent to $4.74 on 390,000 shares, more than twice its usual activity, and Sanford decreased 0.7 per cent to $6.80 with 63,00 shares changing hands, more than its 45,000 average.

Outside the benchmark index, New Zealand King Salmon increased 0.5 per cent to $2.18 after saying it expects flat earnings for the 2020 financial year. The fish farmer is lifting its capital spending programme in an effort to mitigate the higher death rates caused by warmer waters.

Newly-listed Cannasouth dropped 7.3 per cent to 38 cents and is down from the 50 cent price in its initial public offering. Notices to the stock exchange today showed director Anthony Ho bought 50,000 shares for $20,500, or 41 cents each, on market during the company's debut on Wednesday.

Summerset Group's 2025 bond paying annual interest of 4.2 per cent was the most traded debt security with a volume of 2.2 million. The notes closed at a yield of 3.08 per cent, down 2 basis points. Summerset shares rose 0.7 per cent to $5.45.