Stocks across Asia were weaker on Friday as Middle East conflict weighs.
New Zealand’s S&P/NZX 50 index rose for a second week, with the benchmark powered ahead by Infratil’s best week since December 2020, when AustralianSuper’s ill-fated takeover bid prompted investors to rethink their valuations on the stock.
A soft Friday session didn’t dent the weekly gain, with the NZX50 joining Asian markets lower after the US and Iran exchanged fire in the Persian Gulf, although President Donald Trump said the ceasefire was still in effect, describing the latest strikes as a trifle.
Westpac Banking Corp led the local index lower, with the lender shedding rights to an upcoming dividend payment, while power companies such as Meridian Energy weighed on the bourse.
And Reserve Bank figures showed renewed lending growth in March as the Middle East conflict flared up, with business loans climbing 51% from a year earlier and dairy farmers taking on more debt.
The NZX50 fell 95.48 points, or 0.7%, to 13,175.13, with 25 stocks declining, 21 gaining and four unchanged. Turnover across the main board was $140.5 million, of which Infratil accounted for $20.5 million as it dipped 0.7% to $15.04.
The NZX50 rose 1% this week, spurred on by an 18% weekly gain for Infratil. The infrastructure investor took a leg higher after its CDC data centre unit secured a multibillion-dollar capacity contract, coming as global investors’ optimism about the artificial intelligence theme was revived by strong results from chip companies and semiconductor firms.
Forsyth Barr analysts raised their target price on Infratil to $17.50 from $14.40, and kept their ‘outperform’ rating, saying the size of contract meaningfully beat their expectations.
“With CDC’s track record of winning large contracts, we believe its earnings risk remains to the upside,” Forsyth Barr analysts Ben Crozier and Sam Averill said in a note. “Despite CDC’s breakneck growth, Infratil reiterated its view that no additional equity will be needed to deliver on CDC’s current growth plans.”
Infratil’s due to report later this month, with its Wellington International Airport arm reporting a small lift in annual earnings.
Among the week’s other big movers, Vista Group International climbed 13% to $2.12, with major movie studios reporting robust earnings and tech companies more broadly in favour, while Gentrack sank 31% to $4.10 after warning of softer earnings for the year.
The NZX50 joined a softer day across Asia, with markets knocked by the latest skirmish between the US and Iran as investors ponder the chance of a permanent peace being reached. The Polymarket prediction market is pricing in a 33% chance of a deal by the end of May and a 55% chance by the end of June.
Australia’s S&P/ASX 200 index was down 1.6% in late trading, while Japan’s Nikkei 225 index fell 0.5% and Hong Kong’s Hang Seng was down 1.1%.
The kiwi dollar, which is typically linked to investors’ appetite for riskier assets, fell to 59.45 US cents at 5pm in Auckland from 59.62 cents yesterday, even as bond yields tracked higher, with the yield on the 10-year government note up 8 basis points at 4.7%.
The energy sector, which traditionally offers reliable dividends, weighed on the local index, with Meridian falling 3.2% to $5.76, while property stocks were broadly weaker, with Vital Healthcare Property Trust down 2.4% at $1.855, Stride Property declining 1.7% to $1.13 and Kiwi Property Group slipping 1% to 95 cents.
Westpac led the benchmark index lower, falling 6.6%, or $3.19, to $45.30 after shedding rights to the upcoming dividend payment of 77 cents per share.
Air New Zealand fell 3.4% to 42.5 cents amid reports that the national carrier was restructuring its senior leadership team.
Fletcher Building declined 3.1% to $2.82 after agreeing to sell a Melbourne property for A$53.8 million.
Gentrack posted the biggest gain on the day, up 3.8%, helping pare the week’s losses, while Sky Network Television gained 3.2% to $3.22 and Sanford advanced 2.6% to $7.85.
Reporting by Paul McBeth.
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