NZX 50 back in favour as investors eye bargains following weakness

Wednesday, 10 March 2021

The sharemarket gained for a second day, following overseas markets higher, as investors eyed bargains after recent weakness due to rising bond yields.

The benchmark S&P/NZX 50 index advanced 0.9 per cent, or 106.75 points, at 12,251.90 on Wednesday, following a 0.5 per cent gain on Tuesday. The index fell about 7 per cent last month as rising bond yields reduced the attractiveness of some stocks.

Overseas, the Nasdaq surged 3.7 per cent, led by gains in tech companies such as Apple, Amazon and Facebook. The tech stocks rally, which helped lift the S&P 500 1.4 per cent, came after bond yields declined following their rapid rise.

Higher bond yields tend to pull money away from high-priced stocks like technology companies, which have been soaring through the pandemic and, as a result, have been beaten down as bond yields have marched higher.

* NZ sharemarket starts March with 0.6 per cent gain, F&P Healthcare rises

The sharemarket is back in favour as bond yields weakened.

* Moa Group sells unprofitable brewing company for $1.9m

“We had a pretty good lead out of the US with markets over there rebounding, particularly in the growth stocks,” said Grant Davies, an investment adviser at Hamilton Hindin Greene. “Markets have been sold off quite aggressively over the last month, so there’s been a little bit of a buying in the dip.”

Fisher & Paykel Healthcare, the largest stock on the market, rose 2.9 per cent to $29.12, tracking technology growth stocks higher.

Like the Nasdaq, New Zealand's top-50 index was in a technical correction – a fall of 10 per cent or more from its recent peak of 13,558 on January 8.

”There are a few bargain hunting opportunities out there for some investors and that saw the US market track upwards and ours followed suit,” Davies said.

The tick down in bond yields has prompted some investors to favour equities again, he said.

Stocks affected by international travel rose after Australia’s Chief Medical Officer Professor Paul Kelly confirmed that Auckland will no longer be considered a hotspot, and New Zealand is back on the safe country list for travel.

On February 24, Australian officials re-introduced the 14-day quarantine requirement for any travellers who had been in Auckland in the last two weeks, following the recent outbreak of community cases.

Air New Zealand rose 3.5 per cent to $1.645 and Auckland International Airport gained 1.1 per cent to $7.09.

Turners Automotive Group jumped 6.1 per cent to $3.30 after the used-car trader said it expected full-year profit of at least $35 million, ahead of its previous forecast of between $33m and $35m. The board confirmed it expected its annual dividend to total 18 cent a share, and declared a third-quarter dividend of 6 cents.

“Used car markets are still tracking along pretty nicely,” Davies said. “It’s a good sign that people are out there and happy to make those purchases at the moment.”

Hospitality group Savor was the biggest gainer on the NZX, jumping 10 per cent to 20.5 cents, Savor said it had agreed to buy three central Auckland eateries for $11m in cash and shares after selling its unprofitable Moa Brewing business.

“The acquisition of these venues, combined with the divestment of Moa Brewing, provides the group with a solid financial base for future growth,” Savor chairman Geoff Ross and chief executive Lucien Law said in a statement.

– With AP