New Zealand shares joined an Asia-wide rally, led higher by export-focused growth stocks Pushpay Holdings and A2 Milk, two of the bourse’s most volatile stocks.
The S&P/NZX 50 index rose 40.14, or 0.5 percent, to 8,713.96. Within the index, 24 stocks gained, 15 fell, and 11 were unchanged. Turnover was $130.2 million.
Stocks across Asia followed Wall Street higher as investors were buoyed by upbeat comments from White House economic adviser Larry Kudlow that the US could reach a deal with China. The two nations have been embroiled in an 18-month trade dispute which has weighed on global economic growth.
Growth stocks have been hit hardest by the trade tensions, coming at the same time as rising US interest rates have dulled the allure of stocks.
Pushpay, which derives most of its income in the US, rose 4.9 percent to $3.22 on average volumes and extended its recovery from a 12-month low last week. A2, which has benefited from strong Chinese demand for its products, gained 3.7 percent to $10.78.
Stuart Williams, the head of equities at Nikko Asset Management, said investors have underestimated the importance of A2’s supply agreement with state-owned China State Farm as Chinese regulators review e-commerce laws.
A2 has been very volatile, but outperformed the market today, he said.
New Zealand has tried to tread carefully amid tensions between the US and China, given the size of both export markets. However, today the Government Communications Security Bureau rejected Spark New Zealand’s application to use Huawei equipment in building a 5G mobile network. The intelligence agency cited a national security risk over the use of the Chinese vendor.
Spark shares were unchanged at $4.12 in lighter trading than usual of 1.6 million shares. They had been trading at $4.16 prior to the Huawei announcement.
Williams said it was unclear how the decision will affect the company but was very interesting given New Zealand’s strong trade links with both the US and China.
“That the government would be cautious on it but their advisor being definitive is quite interesting,” he said.
Fisher & Paykel Healthcare was the most active stock, with 2.3 million shares traded compared to the 90-day average 639,000. The shares fell 1.9 percent to $13.20. Air New Zealand rose 2.8 percent to $3.09 on 2.2 million shares, while Fletcher Building increased 0.2 percent to $4.70 on volume of 2 million shares.
Of other companies with more than one million shares traded, Kiwi Property Group was unchanged at $1.38, as was Precinct Properties New Zealand at $1.42. Meridian Energy gained 1 percent to $3.17, Chorus slipped 0.3 percent to $4.85, Mercury NZ increased 0.2 percent to $3.44 and Auckland International Airport was unchanged at $6.96.
Outside the benchmark index, Evolve Education sank 25 percent to a record 30 cents after writing down its child care centres by $32 million and reporting a loss of $27.5 million.
Metro Performance Glass climbed 10 percent to 44 cents after Bain Capital emerged on the register as a substantial shareholder.
Tower fell 4 percent to 72 cents after delaying its plans to resume dividend payments until the next financial year. The insurer narrowed its annual loss, although increased claims weighed on its underlying earnings.
Asset Plus increased 1.7 percent to 58.5 cents after the real estate investor lifted first-half profit by a third on cheaper finance costs and lower operating expenses.