Market close: NZ stocks close firm but underperform major markets

The New Zealand sharemarket continued the trend of the week with another small, incremental, gain but as the end of the half year approaches, the market’s performance is well short of the kind of gains seen on major offshore bourses.

By the close, the S&P/NZX50 Index was at 12,626.09, up 39.2 points, or 0.31 per cent, having lost a shade under 7 per cent since hitting its record high in early January of 13,558.19.

In contrast the US share market, boosted by President Joe Biden’s plans to rejuvenate the economy, has gone from strength to strength, the key S&P500 index hitting a record 4,266.49 after gaining 13.6 per cent since the start of the year.

Likewise, the Aussie sharemarket has performed strongly, the ASX200 gaining about 11 per cent since the start of the year.

European markets have done similarly well.

“It has vastly underperformed the European, US and Australian markets, which have had double digit growth,” Forsyth Barr investment adviser Dan Stratful said.

“The utilities have driven the market down by the index-related selling early in the year, which affected Meridian and Contact Energy,” he said.

Meridian finished the day at up 3c at $5.24 while Contact closed a cent higher at $8.10. Genesis, which firmed 4c to $3.38, and Mercury, steady on $6.50, have remained generally flat since the start of the year.

Stratful said the local market’s relative under-performance could also be put down to a flat listed property sector.

Together, the property and power sectors occupy the high-yielding, dividend-paying segment of the market, which has have fallen from favour thanks to early signs of firming interest rates.

Infant formula company a2 Milk and its closely allied manufacturer Synlait were both firm, gaining 19c to $6.75 and 5c to $3.73, respectively, having fallen sharply since late last year due to a2 Milk’s woes in the daigou trade into China.

“They have fallen so much that there is going to come a time when there will be renewed interest in the dairy processing sector, and there will come a time when there is a rebound,” Stratful said.

Shares in manuka honey exporter Comvita topped the list of gainers – rising 16c or 4.9 per cent to $3.44 after the company reported that it was the leading brand in the category in the recently completed “618” shopping festival in China.

Comvita’s total sales through the festival increased by 31 per cent on last year reflecting a strong growth in consumer awareness and demand.

China’s 618 Shopping Festival on June 18 is one of the biggest retail events in the world, generating trillions of dollars worth of transactions.

Comvita said a strength of this model has been evidenced in Mainland China and Asia where it has been able to offset the impact of the challenges in the daigou market in Australia and New Zealand.

The apparent rebound of Comvita, after years of underperformance, has put market newcomer Mee Today in the spotlight.

The company has bought 100 of King Honey Limited from interests associated with Terry Jarvis $36m, raising almost $16m from the market. Shares in Me Today finished unchanged at 10c.

Freightways finished a touch lower at $12.49 while Mainfreight firmed 37c to $75.47 and EBOS gained 15c to $32.60.

“These three are just growing steadily, year-on-year, paying good dividends, offering good growth, good management and good tack records,” Stratful said.

Renewed worries about Sydney ‘s Covid-19 status, and with Wellington going into Covid level 2, had robbed the market of a some confidence, particularly in the so called “re-opening” stocks such as cinemas software company Vista, which dropped by 8c to $2.35.

However Auckland International Airport showed some resilience, gaining 6.5c to $7.41.

“When it clears the Covid-re-opening stocks seem to pick up again,” Stratful said.

Retirement village company Summerset, which strengthened earlier in the week, dropped 20c or 1.5 per cent to $13.10 while newly listed My Food Bag eased 3c to $1.37.

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