Market close: Property stocks back in favour

Property stocks were again back in favour as the New Zealand sharemarket staged an impressive afternoon turnaround, posting a gain of more than 1 per cent.

The S&P/NZX 50 Index fell as low as 12,799.16 but closed 144.51 points or 1.12 per cent ahead at 12,994.19. The index has risen on five of the last seven trading days, with increases right across the main board.

There were 97 gainers and 47 decliners over the whole market on heavy volume of 95.93 million share transactions worth $340.99 million.

The trading was boosted by strong activity in the Smartshares NZ Government Bond and Global Equities exchange-traded funds, with sales of 15.63m units worth $36.32m and 12.28m units worth $36.23m respectively.

Matt Goodson, managing director of Salt Funds Management, said there has been a switch into property stocks.

“The sector has been extremely weak with the prospect of rising interest rates. That outlook hasn’t changed but money is coming back into the market. The talk is that some of the KiwiSaver default changes are filtering through as portfolios are rebalanced.

“The property sector has been lagging Australia and maybe it’s playing catch-up. In inflationary times property companies have the chance of increasing rent and this increases their defensiveness,” said Goodson.

He said all eyes will be on the United States Federal Open Market Committee meeting over the next two days.

“The Federal Reserve has said it will reduce its bond-buying programme by US$15 billion a month, but if it increases the amount to US$30b, then the quantitative easing will finish by March – and markets are starting to price in interest rate rises from then. US interest rates are the benchmark for the whole world.”

Inflation is now running at a 40-year high of 6.8 per cent in the US, after the rate increased 0.8 per cent in November following a 0.9 per cent rise in October.

At home, the property stocks had their second successive day of strong trading, following a bounce-back on Friday.

Property for Industry rose 12c or 4.11 per cent to $3.04; Investore was up 6c or 3.16 per cent to $1.96; Kiwi Property increased 3.5c or 2.95 per cent to $1.22; and Argosy gained 6c or 3.9 per cent to $1.60.

Vital Healthcare Property Trust was also up 4c to $3.85; Precinct Properties gained 3.5c or 2.19 per cent to $1.635; and Stride increased 1c to $2.07.

Market leader Fisher and Paykel Healthcare turned around from an intraday low of $31.79 to $33, a gain of 80c on trade worth $22.43m. Mainfreight had one of its biggest one-day gains, rising $4.24 or 4.67 per cent to $94.99.

Chorus was up 14c or 1.98 per cent to $7.22; Ryman Healthcare increased 12c to $12.35; Summerset Group Holdings gained 35c or 2.71 per cent to $13.25; Restaurant Brands collected 55c or 3.6 per cent to $15.83; and Vulcan Steel rose 18c or 1.98 per cent to $9.28.

Fletcher Building was up 12c to $7.18; DGL Group climbed 19c or 7.14 per cent to $2.85; Tourism Holdings rose 12c or 3.97 per cent to $3.14; and carpet maker Bremworth increased 4c or 6.67 per cent to 64c.

Vista Group joined the party, rising 17c or 7.56 per cent to $2.42; so did Scales Corporation up 26c or 4.64 per cent to $5.86; and Sky Network Television increased 7c or 2.86 per cent to $2.52.

Meal kit company My Food Bag had a dismal day, falling 3c or 2.63 per cent to a low of $1.11. It has fallen 40 per cent since listing in early March at $1.85 when its initial public offer was keenly sought.

Goodson said investors are now wondering what My Food Bag’s business will be like in post-Covid normal trading. Competitor HelloFresh’s share price doubled this year to 95 euros but has now fallen back to 74 euros.

Other decliners were Ebos Group, down 20c to $38.30; Meridian decreasing 4c to $4.68; Spark falling 4c to $4.51; and Move Logistics losing 4c or 2.37 per cent to $1.65.

The Colonial Motor Company declined 16c to $10.82; Harmoney was down 4c or 2.06 per cent to $1.90; and Third Age Health Services decreased 9c or to $2.85.

Comvita, down 4c to $3.32, is launching a $1.3m clinical trial on manuka honey effects on digestive health in conjunction with Otago University. The research partners have been given $875,000 funding from the High-Value Nutrition National Science Challenge.

New Zealand Oil & Gas gained 1c or 2.2 per cent to 46.5c after telling the market the seventh production well in the Indonesian Mahato oil field has been drilled and is producing about 650 barrels a day. Total production in the field is 5000 barrels a day. NZOG’s subsidiary Cue Energy Resources, which is listed in Australia, has a 12.5 per cent stake in Mahato.

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