Meridian, Contact shares gain on optimism of Tiwai Point revival

Tuesday, 3 November 2020

Optimism about Tiwai Point pushed blue chip energy stocks Meridian and Contact higher.

The New Zealand sharemarket rose as blue chip electricity stocks gained on optimism the newly formed Government may breathe fresh life into the Tiwai Point aluminium smelter, underpinning demand for power.

The NZX 50 Index closed up 0.5 per cent on Tuesday, or 59.475 points, at 12,130.31.

“The electricity stocks are trading firmer,” said Hamilton Hindin Greene adviser Grant Williamson. “Both Contact Energy and Meridian are having a very good day.”

Investors may be expecting a positive announcement about the smelter now that Prime Minister Jacinda Ardern has formed a Government and announced her ministerial lineup, he said.

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“Expectations are starting to build that there will be a three to five year extension on that,” Williamson said. “Now that the Government is settled in, we might get some word on that in the not too distant future.”

Meridian advanced 2.1 per cent to $5.495 a share, while Contact gained 2.5 per cent to $7.53. Genesis bucked the trend, down 1.3 per cent to $3.06.

Pushpay jumped 4.6 per cent to $9.20 ahead of its first-half profit announcement on Wednesday. The company, which operates digital payment technology for church donations, is expected to post a big uplift in profits as Covid-19 prompted more donors onto its platform.

New Zealand King Salmon wants to develop salmon farming in Cook Strait.

“I would imagine we have got some potential investors in there looking to buy ahead of the announcement, and obviously they are expecting a pretty good announcement,” Williamson said.

Pushpay shares have more than doubled this year, up 129 per cent.

“That has been a fantastic technology stock for the market and it is pretty close to record levels,” Williamson said.

Elsewhere, Briscoe Group closed unchanged at $4.04, after touching $4.20 earlier in the day.

The retailer, which owns the Briscoes Homeware, Rebel Sport, and Living & Giving chains, posted a 15 per cent gain in third-quarter sales and was upbeat heading into the key Christmas period.

However Williamson noted that its profit will be hurt by the repayment of an $11.5 million Covid-19 wage subsidy to the Government.

“It was very positive growth seen there, but to offset that a little bit, the refund of the wage subsidy will eat into their yearly profitability,” he said.

New Zealand King Salmon fell 1.8 per cent to $1.64. At its annual meeting on Tuesday, the salmon farmer said that while it was “very pleased” with the start of the financial year, it’s still doubtful whether annual profit will lift due to the impact of Covid-19.

Also weighing on the index, medical device maker Fisher & Paykel Healthcare slipped 1.3 per cent to $35.53 after rising almost 3 per cent on Monday.

”Fisher & Paykel Healthcare is a volatile stock these days. It’s still trading at high levels but swings in quite large fluctuations from time to time,” Williamson said.

“It's just given a wee bit back today.”

Asian stock markets followed Wall Street higher on Tuesday as investors watched for United States election results, hoping a win by challenger Joe Biden over Donald Trump in the presidential race might lead to more economic stimulus.

Benchmarks in Shanghai, Hong Kong, Seoul and Sydney advanced. Japanese markets were closed for a holiday.

Traders are betting that Biden might push for a bigger US stimulus if he unseats Trump. That would require support in the Senate, which is controlled by Trump's Republicans. Some incumbents, also up for re-election this week, face challengers from Biden's Democratic Party.

On Monday, Wall Street closed higher amid indications Biden might be leading.

– AP