Synlait Milk shares slump further, dragging a2 Milk with it - Market close

The New Zealand sharemarket fell after a mixed day of trading.

Debt-ridden Synlait fell a further 9 per cent and this time dragged its major customer a2 Milk down as the New Zealand sharemarket had another day of mixed trading.

The S&P/NZX 50 Index was up and down all day and traded within a range of 12,038.91 and 11,996.29 before closing at 12,035.26, down 5.23 points or 0.04 per cent.

There were 71 gainers and 63 decliners over the whole market on volumes of 29.02 million share transactions worth $109.12m.

Wall Street was also mixed following Federal Reserve chair Jerome Powell’s wait-and-see speech at the Stanford Graduate School of Business.

Powell said the Fed has time to assess incoming economic data before starting interest rate cuts, which will likely come at some point this year. He said the strength of the economy gives the Fed flexibility.

The recent inflation readings, which came in higher than expected, did not materially change the overall picture of cooling prices, Powell said.

Jeremy Sullivan, investment adviser with Hamilton Hindin Greene, said there wasn’t a lot of guidance in Powell’s speech. “The US is still likely to cut before us and once the Fed does, then it paves the way for other central banks to do the same.”

Sullivan said the Reserve Bank of New Zealand’s monetary policy statement next week will be closely followed.

Synlait was down 6c or 8.82 per cent to 62c and has fallen more than 18 per cent since announcing its $96.2m first-half net loss on Tuesday. A2 Milk, which has a 20 per cent shareholding in Synlait, declined 24c or 3.64 per cent to $6.36.

Sullivan said a2 Milk’s share price drifted on concern that some dairy farmers might walk away from supplying Synlait. But these farmers need to give notice, normally up to two years, and by that time Synlait should have its balance sheet sorted.

He said a2 was down on light volume and “I don’t see any panic. People are just translating Synlait’s supply issues with a2 Milk.”

A2 Milk attempted to end its exclusive manufacturing arrangement with Synlait in October, but this was disputed and is in arbitration.

Synlait retains the arrangement with a2 until that process is complete.

Ryman Healthcare decreased 7c to $4.48; PGG Wrightson shed 5c or 2.27 per cent to $2.15; Vector was down 8c or 2.04 per cent to $3.85; and Carbon Fund fell 7c or 4.14 per cent to $1.62.

In the retail sector, Briscoe was up 9c or 1.96 per cent to $4.68; The Warehouse gained 3c or 1.97 per cent to $1.55; and Hallenstein Glasson was down 18c or 2.8 per cent to $6.26.

Other decliners were Serko falling 11c or 2.91 per cent to $3.67; Move Logistics down 1.5c or 3 per cent to 48.5c; Steel & Tube decreasing 2c or 1.87 per cent to $1.05; and Radius Care shedding 1c or 7.14 per cent to 13c.

Mercury Energy rose 12c or 1.79 per cent to $6.84; Heartland Group increased 3c or 2.52 per cent to $1.22; Comvita rebounded a further 9c or 4.19 per cent to $2.24; Arvida Group added 3c or 2.68 per cent to $1.15; and Oceania Healthcare gained 3c or 4.92 per cent to 64c.

Other gainers were Scott Technology increasing 9c or 3.15 per cent to $2.95; Eroad up 4c or 4.6 per cent to 91c; Millennium & Copthorne Hotels NZ rising 9c or 4.86 per cent to $1.94; Accordant Group improving 2c or 3.45 per cent to 60c; and 2 Cheap Cars adding 2c or 2.5 per cent to 82c.

New listing Being AI attracted a price inquiry from market regulator NZ RegCo after rising a further 2c or 40 per cent to 7c on 34 trades worth $59,500. Artificial intelligence stock Being has risen from 1.7c since its first trade on Tuesday and the company confirmed it is meeting continuing disclosure obligations.

Sullivan said Being’s price is being pushed around on light volume – having AI in its name seems to be the rationale – and it’s one of those stocks that doesn’t get institutional interest because of the size of the business.

He cautioned investors who haven’t researched the fundamentals of the Being business.

Kiwi Property, up 1.5c or 1.79 per cent to 85.5c, told the market the value of its $3.2 billion portfolio has increased 0.1 per cent or $3.6m for the six months ending March, despite the slow economy and high interest rate environment. Fellow property stock Argosy gained 2c or 1.74 per cent to $1.17.

Rua Bioscience, down 0.003c or 4.05 per cent to 7.1c, has signed an agreement with Malta-based AlphaFarma, which will supply Rua dried flower medicinal cannabis products for the German market through its distribution partner Nimbus Health.