NZ shares rise as index funds rebalance

The S&P/NZX 50 Index rose 19.08 points, or 0.2 percent, to 12,515.22. Within the index, 30 stocks fell, 17 rose and three were unchanged. Turnover was $514.5 million due to the rebalance.

Mercury NZ led the market higher, up 4.8% to close out the week at $6.55 after having struck a deal on Monday to buy Tilt Renewables’ NZ assets.

The electricity generator is now up almost 10% this week, having opened the week at $6.

Infratil dropped 5.4% to $6.95 in the rebalance, wiping away any share price gain it made from the sale of Tilt, which itself has been trading steadily just below the takeover price at $7.60.

The quarterly rebalance is happening with the yield on a 10-year government bond hovering just below 2% for the first time since May 2019.

ASB economists said in the note that two key themes in financial markets were asserting themselves over February and March: rising long-term yields and sharemarket volatility.

“With the global economic outlook steadily improving and inflation expectations rising, speculation has continued to mount around when central banks will begin to contemplate rate hikes and the bond market has felt the influence,” they wrote.

This has had an outsized impact on “defensive” stocks which pay good dividends and have been popular while low-interest rates have been low. The electricity generators in particular have been unusually volatile as investors attempt to settle on new valuations.

Today some got a boost, Contact Energy was up 3.5% at $7.07 and Meridian Energy rose 2.6% to $5.60. However, Genesis Energy declined by 4.2% to $3.45.

Outside of the top 50 stocks, Ikegps Group climbed 4.3% to 98 cents after it won a long-term contract with an unnamed US national engineering services business worth US$700,000 per year.

The utility measurement firm earned $4.4 million of revenue in the first half of 2021, meaning the deal a significant size for the business.

Refining NZ jumped 6.1% to 43.5 cents after releasing its annual report this morning.

In the report, Chair Simon Allen said the company’s fuels infrastructure has “significant latent value which could be realised on transition to an import terminal, with the added benefit of significantly lowering its carbon emissions profile”.

The kiwi dollar was trading 71.65 US cents at 5pm in Wellington, down from 72.41 cents yesterday.

The trade-weighted index was at 74.83 at 5pm, from 75.33 yesterday. The kiwi traded at 92.52 Australian cents from 92.56 cents, 78.03 yen from 78.84 yen, 60.14 euro cents from 60.53 cents, 51.49 British pence from 51.93 pence, and 4.6646 Chinese yuan from 4.7001 yuan.