Synlait Milk and Mainfreight take hit as NZ sharemarket down

On Wednesday, the S&P/NZX 50 Index closed down 0.62% or 80.44 points, falling to 12,855.97, after 31.1 million shares changed hands to the value of $122.12m.

The S&P/NZX 20 index closed at 7537.53, down 0.67%, while the S&P/NZX 10 index ended the day at 12,600.15, falling 0.73%.

There were 57 gainers on the main board and 76 decliners.

The market reacted strongly to the news of manufacturing “challenges” at Synlait Milk’s flagship plant at Dunsandel, in Canterbury.

Synlait upbeat

Synlait said it expects to report a big lift in its underlying earnings for the current year and for its net bottom-line loss to shrink.

Hamilton Hindin Greene investment adviser Jeremy Sullivan said the manufacturing issues could potentially lead to delays for a2 Milk to get its product to market.

“The new chief executive for Synlait came out and said we don’t expect to need any more capital and we’re well within our competencies and tried to reassure investors, but investors are voting with their feet,” Sullivan said.

Synlait’s share price fell 7.69% to $0.60 while a2 Milk shares dipped 1c to $8.80.

Mainfreight bemoans disappointing start

Mainfreight’s annual shareholders’ meeting was met with a poor response from investors, after the business said it had a slow and disappointing start to the financial year.

Its share price fell late in the day by $6.36 or 9.58% to $60.00 with $8.86m worth of shares traded hands.

Elsewhere, the Government gave the green light for Kiwibank to raise up to $500m of capital to help the bank grow.

Sullivan said the market would absolutely welcome the move, and the Government would likely get a good price for it as well.

“Look at the likes of the gentailers and how well that’s actually worked out in terms of the government maintaining their controlling stake in the businesses and the share prices. They got their cake and got to eat it too.”

Air NZ names new chief

Air NZ announced it had found a replacement for outgoing chief executive Greg Foran, with current chief digital officer Nikhil Ravishankar appointed as his successor.

Its share price remained flat following the announcement on 58c.

Meanwhile, Ryman Healthcare’s share price rose 1.22% or 3c to $2.49. following its annual shareholder meeting.

Ryman chief executive Naomi James highlighted the changes the business is making to turn its fortunes around.

Ryman had 903,906 shares change hands worth $2.24m.

Sullivan said to look out for Microsoft’s earnings result, expected overnight on Wednesday.

International market

Wall Street stocks retreated on Tuesday as markets digested major merger announcements and monitored United States-China trade talks ahead of big tech earnings later in the week.

Representatives from Beijing and Washington signalled further talks were likely following a round of negotiations in Stockholm. But a top US trade official stressed that President Donald Trump would make any “final call”.

Meanwhile, investors digested several significant earnings reports, as well as merger announcements in the rail and energy sectors, ahead of major economic news catalysts later in the week.

“After reaching all-time highs, markets are going to take a wait-and-see attitude,” said Art Hogan of B. Riley Wealth Management.

The Dow Jones Industrial Average finished down 0.5% at 44,632.99.

The broad-based S&P 500 shed 0.3% to 6,370.86, while the tech-rich Nasdaq Composite Index declined 0.4% to 21,098.29.

Both the S&P 500 and Nasdaq had finished at records on Monday.

– Additional reporting AFP