Ryman and Tower were rewarded for their strong results.
A Ryman village.
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New Zealand’s S&P/NZX 50 index was one of the laggards across Asia as the end to the Reserve Bank’s rate cut cycle sapped demand for the likes of utilities and property companies typically held for their reliable dividends.
Exporters including Fisher & Paykel Healthcare and Scales Corp were also knocked as the plateau in interest rates spurred gains for the kiwi dollar, eroding the value of their overseas receipts.
Meanwhile, Ryman Healthcare and Tower were on the green side of the ledger after the two companies respectively reported upbeat results, with the retirement village operator posting positive cashflow for the first time in 10 years and the general insurer notching up a record profit.
And the latest round of data again showed the domestic economy is slowly on the mend, with Statistics New Zealand’s retail trade survey showing stronger consumer spending than economists predicted and ANZ’s monthly business confidence survey showing firms at their most optimistic in 11 years.
The NZX50 dropped 129.81 points, or 1%, to 13,432.2, with 35 stocks declining, 11 gaining and four unchanged. Turnover was $144.1 million, of which Ebos Group accounted for $19.2 million as it dropped 2.3% to $27.95.
The healthcare and animal products maker was one of several exporters to decline as a rally in the currency eroded their international earnings. Apple exporter Scales Corp led the benchmark index lower, sliding 3.3% to $5.85, while index heavyweight Fisher & Paykel Healthcare dropped 1.7% to $37.75 and global logistics group Mainfreight declined 2.1% to $65.60.
The kiwi dollar climbed to 57.27 US cents at 5pm in Auckland from 56.92 cents yesterday, and advanced to 87.68 Australian cents from 87.53 cents.
The currency was buoyed after the Reserve Bank’s quarter-point cut to the official cash rate on Wednesday was seen as the end of the loosening cycle, with the central bank’s next move now seen as a hike. The two-year swap rate climbed 9 basis points to 2.79%.
“The rhetoric around whether we may be done has driven up the currency, interest rates and our relatively yield-sensitive market has gone in the opposite direction,” said Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene.
Among companies held for their reliable dividends on the red side of the ledger, Investore Property fell 2% to $1.20, Meridian Energy declined 1.9% to $5.67, Vital Healthcare Property Trust slipped 1.8% to $1.945 and Mercury NZ slid 1.6% to $6.36.
Precinct Properties New Zealand fell 1.6%, or 2 cents, after shedding rights to its 1.4975 cents per share dividend.
Spark New Zealand was the most heavily traded stock on the day, with a volume of 2.5 million, as it decreased 0.4% to $2.24.
Ryman Healthcare posted the biggest gain on the day, up 2.1% to $2.92 after the retirement village operator reported its first positive free cash flow in a decade, with $56 million going into its coffers in the six months ended Sept 30. Fair value adjustments pushed the bottom line into the red, with a loss of $45.2 million.
Hamilton Hindin Greene’s Sullivan said Ryman isn’t out of the woods yet, but the positive free cashflow is a good sign.
“They haven’t knocked it out of the park, but it’s fair to say the company is moving in the right direction,” he said.
Tower gained 1.3% to $1.945 after the general insurer reported a record annual underlying profit of $107.2 million on a 2% increase in gross written premium and a steady management expense ratio. The board declared a final dividend of 16.5 cents per share, taking the annual return to 24.5 cents, up from 9.5 cents a year earlier.
Retailers were mixed after Statistics New Zealand figures showed consumer spending grew at a faster pace than economists predicted in the September quarter. KMD Brands rose 1.8% to 28 cents, while Hallenstein Glasson Holdings declined 0.7% to $9.45 and Briscoe Group slipped 0.4% to $5.33. Outside the benchmark index, Warehouse Group fell 1.3% to 78 cents and Michael Hill International rose 1.3% to 39.5 cents.
Meanwhile, the ANZ business outlook showed firms’ confidence jumped to an 11-year high with a net 67.1% predicting better economic conditions in the coming 12 months.
Probiotics firm Blis Technologies jumped 21%, or 0.3 of a cent, to 1.7 cents after reporting a 28% increase in first-half revenue, and New Zealand King Salmon Investments slipped 1% to 19.6 cents after reporting a loss of $6.3 million in the eight months through September, having adopted a new balance date making comparisons difficult.
Reporting by Paul McBeth.
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