NZX 50 index gains 0.2%; SkyCity loses spot on the 20

The S&P/NZX 50 climbed 0.2% to 12,564.420 with about 35.3 million shares changing hands, amounting to $118.7 million in value traded.

Harbour Asset Management portfolio manager Shane Solly said Fisher & Paykel Healthcare helped keep the index in the green by leading volumes and rising 1.83% to $36.76.

Despite ending the day relatively flat, Solly said the day got off to a positive start with a Scales Corporation market update.

Scales said it was expecting full-year net profit of between $40m and $45m when it posts earnings in August, up from the previous guidance range of between $37m and $42m issued in April.

The company’s share closed 1.1% higher at $4.60. Allied Farmers was also up, lifting 5.63% to 75 cents on low trading volumes.

“On the eve of Fieldays, there appears to be some excitement about the [rural] part of the economy,” Solly said.

Index reshuffles

After the market closed on Monday, S&P Dow Jones said it would remove SkyCity from the NZX 20 as of June 23 and replace it with Gentrack Group.

The news precipitated a 3.03% drop in SkyCity equities to 96 cents, partially reversing the 5.32% gain it had locked in the previous day.

Monday’s gains were off the back of the news that SkyCity would file legal proceedings against Fletcher Building, seeking $330m in damages due to the delay in opening the New Zealand International Convention Centre (NZICC).

In an investor note, Forsyth Barr analyst Rohan Koreman-Smit said he assumed SkyCity would be unsuccessful with its claim, and that the burden of proof fell to the casino.

Despite being included in the index, Gentrack Group shares fell 3.56% to $11.91 but remain nearly 24% higher on an annual basis.

Solly highlighted that the NZX 20 is not the best-followed index and that it will be helpful for Gentrack “at the margin”.

“More than anything, inclusion in the 20 is great recognition,” he said.

The rebalancing of the 20, followed by S&P’s reshuffle of the NZX 50 on Friday, resulted in The Warehouse Group losing its place to Briscoe Group.

Briscoe Group continued its strong week, rising 4.63% to $5.65 after a 9.76% jump to start the week.

Conversely, The Warehouse Group compounded Monday’s fall by dipping another 4.4% to close at 87 cents.

Property

The S&P/NZX Real Estate Select Index, which includes the eight largest property companies on the register, was up 1.12% throughout the day, with not one major property company declining.

Argosy Property led the pack, gaining 2.08% to $1.06, with Property for Industry not far behind, up 1.86% to $2.195.

Solly said that as interest rates come down, investors are looking to put property in the income-producing parts of their portfolios.

“There is healthy yield pick-up against term-deposit earnings,” he said, adding that recent earnings reports had provided green shoots in a sector that is undervalued relative to historical pricing.

Overseas, markets held their breath as American and Chinese delegations began talks in the United Kingdom aimed at cooling an ongoing trade war between the world’s two biggest economies.

At 5pm, Australia’s benchmark index, the ASX 200, was up 0.76% to 8,580,30 points, edging closer to its all-time high of 8,615.20.