Property stocks were at the bottom of the leaderboard after Precinct’s capital raising.
New Zealand’s S&P/NZX50 index posted its worst week since May as volatility re-emerged around the world with the ratcheting up of US-China tensions and questions resurfacing about the sustainability of the artificial intelligence boom, sparking a surge in gold prices and benefiting miners such as Santana Minerals.
The kiwi dollar nudged up against the greenback as the yield on New Zealand government bonds retained a tiny advantage over their US peers, with both falling below 4%, and ahead of inflation figures from Statistics New Zealand on Monday, which are expected to show a pick-up in the pace of price rises, but not so much as to deter the Reserve Bank from cutting its key rate.
The benchmark stock index capped off the week with a decline on Friday as heavyweights including Fisher & Paykel Healthcare, Infratil, Spark New Zealand and Auckland International Airport dragged the bourse lower, with markets across Asia broadly subdued.
Eroad sank to a two-month low as it shed more than third of its value after paring back its US aspirations and booking a charge of as much as $150 million to focus on the growing opportunities in Australia and New Zealand.
The NZX50 fell 1.3% this week in its steepest weekly slide since late May, as investors were rattled by the US and China jostling for control of rare earth materials that are inputs for high-tech devices. At the same time, growing concerns about the AI boom tempered some of the optimism about the sector.
That weighed on NZX’s Smart Bitcoin exchange traded fund, which shed 9.1% through the week to end Friday at $4.182, while cinema analytics firm Vista Group International fell 1.8% on Friday to $2.75, taking its weekly decline to 7.4%.
Gold has been the beneficiary of the heightened risk aversion, with futures prices up 1.7% at US$4,377 an ounce at 5pm in Auckland, which in turn has fuelled domestic demand for exposure to the previous metal.
NZX’s Smart Gold ETF was the most traded security on the Sharesies platform on Friday as it climbed 3% to $4.12, for a weekly gain of 10%, while would-be miner Santana Minerals was the second-most traded security on Sharesies, increasing 0.5% to $1.08 for a weekly gain of 21%.
Property stocks were among the hardest hit through the week after Precinct Properties NZ’s $310 million capital raising prompted institutional investors to rejig their portfolios to take part in the discounted placement.
Precinct declined 1.6% to $1.23 – its offer price – taking its weekly decline to 7.5%, while Goodman Property Trust was down 7.4% on the week at $2.12 and Kiwi Property Group shed 5.3% to end the week at $1.065. Both Goodman and Kiwi were unchanged on Friday.
The kiwi dollar traded at 57.30 US cents at 5pm in Auckland from 57.40 cents yesterday and up 0.2% on the week, as the yield on 10-year government bonds fell 4 basis points to 3.96%, holding above the 3.95% yield on their US equivalent.
Stats NZ releases the September quarter consumers price index on Monday which is expected to show an acceleration in inflation, principally from the weak currency, and not enough to stop the Reserve Bank from cutting the official cash rate a quarter-point to 2.25%.
“We expect to see pockets of frustrating price increases,” Kiwibank senior economist Mary Jo Vergara said in a note. “But in this game of push and pull, we think disinflation will dominate the medium-term.”
The NZX50 fell 99.89 points, or 0.8%, to 13,289.21, as 32 stocks declined on Friday, 13 gained and five were unchanged. Turnover was $169.6 million across the main board, of which Mercury NZ accounted for $35.1 million as it rose 1.6% to $6.49.
Stocks across Asia were broadly weaker with Australia’s S&P/ASX 200 index down 0.8% in late trading, while Hong Kong’s Hang Seng dropped 1.6% and Japan’s Nikkei 225 index was down 0.5%.
Blue-chip companies were the main drag on the local bourse, with Fisher & Paykel Healthcare falling 2.8% to $35.45, Auckland International Airport declining 0.5% to $8.04, Infratil dipping 0.6% to $12.43 and Spark New Zealand slipping 0.8% to $2.37.
KMD Brands led the NZX50 lower, falling 4.7% to 30.5 cents, while Vector posted the biggest gain on the day, up 1.8% at $4.98.
Outside the benchmark index, Eroad sank 35% to $1.88 after announcing plans to refocus its efforts in Australia and New Zealand, where it sees the greatest value to be gained, and pull back its US aspirations, where slow sales cycles have stymied its growth. The company will book charge of as much as $150 million on the North American unit and trimmed its revenue guidance for the March year.
It also appointed director John Scott as executive chair, while co-chief executive David Kenneson will leave the company at the end of the month.
Mine explorer Uvre dropped 6.2% to 30.5 cents in its second day of its secondary listing on the NZX, while Manuka Resources – parent of Trans-Tasman Resources – halted trading of its shares at 11.4 cents to raise new money. Manuka’s shares surged 54% on the NZX this week.
Reporting by Paul McBeth.
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