Greg Smith, head of retail with Devon Funds Management, said the commentary alongside the OCR rise was uber hawkish and it was no surprise that the market reacted.
“The 75 basis points was widely anticipated but what wasn’t considered was the bank saying it could have been a 100 basis points increase.
“There is persistent inflationary pressures in the economy, the low level of unemployment is not at a sustainable level and consumer spending hasn’t cooled. Mortgage rates will head into the sevens next year, and the interest rate rises will inflict a lot of pain on mortgage holders and businesses,” Smith said.
Ebos Group’s recent moves stalled, falling 31c to $41.54; Auckland International Airport was down 10.5c to $7.845; Fletcher Building declined 10c or 1.95 per cent to $5.02; Infratil decreased 17c or 1.93 per cent to $8.63; and Synlait Milk shed 8c or 2.78 per cent to $2.80.
Property companies Argosy was down 4.5c or 3.59 per cent to $1.21, Goodman Trust decreased 3.5c to $2.055; and Precinct declined 2.5c or 2.02 per cent to $1.21.
Freightways collected 8c to $9.99; Comvita gained 6c or 1.85 per cent to $3.30; Gentrack was up 8c or 4.79 per cent to $1.75; Cooks Coffee rose 7c or 22.58 per cent to 38 per cent; and Embark Education added 5.5c or 9.57 per cent to 63c.
The beleaguered retirement village sector was again hit. Ryman Healthcare was down 56c or 8.1 per cent to a new low of $6.35. It has fallen more than 22 per cent in the past four trading days.
Smith said interest rates heading higher than originally thought will have consequences on businesses with a lot of debt. Ryman’s $3 billion debt is not far away from its market capitalisation of $3.17m and it certainly is facing some headwinds.
Summerset Group declined 47c or 5.01 per cent to $8.91, and Arvida fell 7c or 5.88 per cent to $1.12, nearly a half of its high of $2.099 in early October last year.
Oceania Healthcare declined 3c or 3.66 per cent to 79c after reporting a 70 per cent fall in net profit to $11.19m on revenue of $122.11m, up 7 per cent for the six months ending September.
Realised gains from new sales and resales were up 12 per cent compared with the previous corresponding period, and Oceania’s asset base also increased 12 per cent to $2.5b. It is constructing 519 units in Auckland, Hamilton, Tauranga, Blenheim and Christchurch.
Other decliners were Vista Group down 3c or 1.96 per cent to $1.50; Third Age Health decreasing 10c or 5.26 per cent to $1.80; PGG Wrightson shedding 11c or 2.6 per cent to $4.12; Eroad losing 6c or 4.69 per cent to $1.24; Scales Corp down 12c or 2.66 per cent to $4.39; and My Food Bag falling 3.5c or 7.22 per cent to 45c.
Turners Automotive, increasing 2c to $3.60, had earlier reported a steady net profit of $17.1m on revenue of $185.3m, up 11 per cent, for the six months ending September. It is paying a second quarter dividend of 5c a share on January 26.
Turners told the market it increased its market share to 8.2 per cent, from 6.4 per cent, while used car sales were down 7.5 per cent and auto retail revenue rose 13 per cent to $130m.
Insurer Tower, unchanged at 69c, reported a steady result for the 12 months ending September, with revenue at $441.52m and net profit at $18.8m. Gross written premium was up 13 per cent to $457m compared with the previous year and customer numbers increase 5 per cent to 319,000. Tower is paying a final dividend of 4c a share on February 1.
Serko, down 1c to $2.49, reported revenue of $19.44m, a rise of 106 per cent, and a net loss of $19.73m which increased 30 per cent for the six months ending September.
With $102.9m in hand, Serko is targeting a return to cash flow positive in the 2025 financial year. Total travel booking volumes rose 73 per cent to 2.3 million, from 1.3 million.
