Global uncertainty leads to sharemarket weakness

OIl prices have risen again, bringing a chill to trading on New Zealand's stock exchange today. Photo/ AP

The New Zealand sharemarket stumbled again as the oil price increased, inflation fears reappeared and leader Fisher & Paykel Healthcare took another fall.

The S&P/NZX 50 Index traded lower from lunchtime but had a late pick-up, closing down 43.39 points or 0.36 per cent to 12,017.61. There were 58 gainers and 72 decliners over the whole market on steady volume of 35.94 million share transactions worth $150.77 million.

Jeremy Sullivan, investment adviser with Hamilton Hindin Greene, said the local market was weaker again because of the global economic uncertainty. "We seem to take one step forward and then two steps backwards."

Wall Street took a step backwards overnight as crude oil increased to nearly US$113.6 a barrel, sparking renewed inflation concerns. Dow Jones Industrial Average was down 1.29 per cent to 34,358.5 points, the S&P 500 declined 1.23 per cent to 4456.24 and the Nasdaq Composite fell 1.32 per cent to 13,922.6.

At home, Fisher and Paykel Healthcare dragged the market down for the second day running, falling $1.18 or 4.59 per cent to $24.52 on trade worth $24.49m after putting out a warning of slowing revenue. The biggest stock on the market has now fallen nearly 12.5 per cent in two days.

Sullivan said most analysts were still viewing Fisher and Paykel at a higher value, with an average share price of $32 but they may well be reviewing their reports after the latest guidance.

The market is anxiously waiting for details of Air New Zealand's billion-dollar capital raise, expected over the next few weeks. It would be the second largest capital raise in New Zealand's history after Auckland International Airport secured $1.2 billion at $4.66 a share in April 2020.

Air New Zealand, down 3c or 2.12 per cent to $1.385, will be raising up to 75 per cent of its present market capitalisation of $1.56b. The national airline is mainly backed by the Government (with a 52 per cent holding), passive investment funds and retail investors.

Its share price will have to be heavily discounted to attract institutional investors into the capital raise, and the offer price could be as low as 50-60c a share.

"Everyone believes our national carrier will not disappear and tens of thousands of retail investors will buy into the capital raise. Air New Zealand is between a rock and a hard place. The institutions will be looking for a hefty discount, and the Government may convert their debt into equity and will want a reasonable price," said Sullivan.

EBOS Group, down 31c to $38.69, told the market the Australian Competition and Consumer Commission has approved the $1.26 billion purchase of medical devices distributor LifeHealthcare.

Fletcher Building declined 10c to $6.28; The Colonial Motor Company fell 34c or 3.23 per cent to $10.20; DGL Group was down 6c or 1.85 per cent to $3.19; Millennium & Copthorne Hotels New Zealand decreased 8c or 3.38 per cent to $2.29; and Rakon was down 5c or 2.91 per cent to $1.67.

Auckland International Airport increased 8c to $7.74; Contact Energy was up 12c to $8.06; Meridian increased 10c to $5.16; Vector was up 8c or 1.98 per cent to $4.13; and Vista Group gained 5c or 2.78 per cent to $1.85.

NZME rose 5c or 3.38 per cent to $1.53; KMD Brands increased 3c or 2.26 per cent to $1.36; Fonterra Shareholders' Fund was up 4c to $3.49; Sky Network Television gained 5c or 1.82 per cent to $2.80; and T&G Global improved 6c or 2.17 per cent to $2.83.

Port companies South Port New Zealand rose 21c or 2.47 per cent to $8.70; Port of Tauranga collected 9c to $6.07; and Marsden Maritime Holdings increased 7c to $6.07.
Goodman Property Trust is expecting a portfolio revaluation gain of $150m for the second half of 2022 financial year ending March – following the record $504.7m first half revaluation. The portfolio would be valued at $4.7b.

The revaluation gain is expected to add 10c a unit to Goodman's net tangible assets (NTA), which were $2.496 a unit at September 30 last year. Goodman's share price slipped 1.5c to $2.37.

Among other property companies Investore, down 1c to $1.73, is trading at a 21 per cent discount to NTA; and Kiwi Property Group, unchanged at $1.065, has a 25 per cent discount.

Scott Technology was down 2c to $3.13. Scott earlier told the market its mining division will be having a busy first quarter of the year. Scott is completing Rio Tinto's Gudai Darri automated laboratory in Western Australia – it will be the safest and most productive iron ore facility in the world.

Scott is also involved with another large and complex automated laboratory system in Western Australia for MinAnalytical, and it has appointed Ian Enright, based in Perth, as global director of Scott Mining.

Synlait Milk was unchanged at $3.38 after increasing its forecast milk price from $9.25 to a record $9.60 per kilogram of milk solids. Since the January forecast global commodity prices have risen significantly.