Market close: Rising bond yields, energy stocks bring New Zealand shares down

Rising bond yields at home and a fall in leading energy stocks Contact and Meridian took the heat out of the New Zealand sharemarket at the end of a volatile trading week.

The S&P/NZX 50 Index started strongly before steadily sliding from lunchtime and then having a slight late recovery. The index was down 36.29 points or 0.28 per cent to 13,012.19, after reaching an intraday high of 13,126.77 and low of 13,002.44.

There were 88 gainers and 53 decliners over the whole market, and volume was boosted by late trading in Contact and Meridian, with a total of 59.21 million shares worth $227.52 million changing hands.

The New Zealand 10 Year Government Bond Yield reached a 30-month high with a four basis points increase to 2.25 per cent, according to Bloomberg – the first time it’s been above 2.2 per cent since March 2019. The yield was 0.5 per cent this time last year.

Shane Solly, portfolio manager with Harbour Asset Management, said: “While bond yields have softened in Europe and the US, our’s have gone up. This reflects the Reserve Bank monetary policy tightening and the expected increase in the third quarter consumer price index to close to 4 per cent.

“Mind you, there is a better tone to the market with the reset of bond yields and a series of annual meetings coming up next week. We will get some updates and a gauge on earnings growth,” Solly said.

Ebos Group, Fletcher Building, Auckland International Airport, Tourism Holdings, Comvita and PGG Wrightson are holding annual meetings.

The iShares Global Clean Energy Exchange Traded Fund was having its final day of rebalancing, and Contact was down 14c or 1.71 per cent to $8.07 on trade worth $36.31m, while Meridian declined 6.5c to $4.835 on trade worth $37.6m.

After its strong rebound, a2 Milk gave back 14c or 1.94 per cent to $7.08, after reaching an intraday high of $7.46. Synlait was down 15c or 3.83 per cent to $3.77.

Solly said there is conflicting data out in the market about whether the daigou sales channel is back fully functioning.

Arvida went into a trading halt after announcing it is buying six Arena Living retirement villages from Blackstone in Auckland and Tauranga for $345m. This will add 648 villas and 398 apartments to its existing portfolio of 4325 units and beds, representing a 24 per cent expansion. The acquisition will contribute an additional $32m-$34m to the 2022 profit.

To pay for the purchase, Arvida is making $155m placement at $1.96 a share, and it will also implement a $175m renounceable rights offer at $1.85 a share. Arvida last traded at $2.08.

Solly said the deal seems well thought out and Arvida has made a solid acquisition, giving them a bigger footprint particularly in Auckland.

Fisher and Paykel Healthcare declined 26c to $30; Freightways shed 13c to $12.67; and Vista Group fell 6c or 2.31 per cent to $2.54.

Mainfreight, falling out of favour, dropped $2.07 or 2.32 per cent to $87.25 – the first time it has been under $90 for nearly two months.

Port of Tauranga recovered 13c or 1.92 per cent to $6.90; Ryman Healthcare increased 25c to $15; Trustpower collected 22c or 3.05 per cent to $7.44; Restaurant Brands picked up 25c to $15.73; and Michael Hill International was up 5c or 5.05 per cent to $1.04.

Other gainers were Argosy Property, rising 2.5c to $1.615; Goodman Property Trust moving 6.5c or 2.7 per cent to $2.475; Smartpay Holdings increasing 5.5c or 6.59 per cent to 89c; Hallenstein Glasson picking up 9c to $7.20; The Warehouse Group up 6c to $4.07; and Vector collecting 8c or 1.99 per cent to $4.010.

Rakon and New Zealand Oil & Gas continued their runs, rising 5c or 3.18 per cent to $1.62, and 2.5c or 4.81 per cent to 54.5c respectively. Just Life Group increased 4c or 4.65 per cent to 90c.

Meal kit firm My Food Bag increased 3c or 2.5 per cent to $1.23 after providing a half-year update, with 808,000 deliveries and revenue of $98.4m in line with expectations. My Food Bag has 76,875 active customers, up 3.3 per cent, and is intending to pay an interim dividend in December.

Fast-moving transtasman chemicals business DGL Group Limited gained 6c or 1.99 per cent to $3.08 after buying AUSblue, which makes 50m litres of diesel exhaust fluid a year. Since listing in late May DGL has made eight acquisitions and is building a new chemicals storage warehouse in Auckland.

Chatham Rock Phosphate was up 1.5c or 12.4 per cent to 13.6c after signing an agreement to buy the Korella Mine in north-west Queensland near Mt Isa for $12.94m. The low cadmium phosphate mine will supply the domestic market.

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