Market darlings falter but the rise of other stocks has lifted the NZX-50 to a new record

The  NZ  sharemarket bounded to a  new high on Wednesday, with the NZX-50 index surpassing  the previous  peak  to  climb above 12870.

Investors  are   not  exactly  dancing  in the  streets, although in  past eras they might have been.

But  there  seems  to be  a  clear conviction among investors  that  the  NZ economy  is  escaping from the  shackles of  the Covid-19  pandemic faster than  most others, and anyway, where else can funds  be  placed  for  a  decent  return (apart from  the  overheated  housing  sector)?

Strangely, too, the  market hit  its  new  peak  just  as the  gloss  had gone from the  stocks  which  had  enjoyed to that  point  the  status   of  market darlings, F&P  Healthcare  and  A2 Milk.

The first stirring  in the market  could  be detected  on  Monday when  the prospect of  a  sale  by investment company Infratil  of its controlling stake  in the windfarm operator Tilt Renewables  helped  drive the  index  to  a session high of 12,745 before growing fears about international  trade  curbed  investor  enthusiasm. As  one analyst  commented, the  market has had a  very long  run and people are just a bit wary about another blow-out in Sino-US relations.

Still, news  of Infratil’s  move drove  its  price up to  $5.92, while Tilt  finished   up 63c at $4.55. Mercury, with 20% of Tilt, reached $6.47.

This  was  a  curtain-raiser  to the next disclosure  involving Infratil, one that  excited the  NZ Herald   which  headlined it “ Giant Oz Super Fund makes  5b play for Infratil”.

Australia’s  largest super fund had  made an offer  for  Infratil, initially  valuing  the  shares at $6.40, subsequently revised  to $7.43.  But  Infratil ‘s directors  found  this  seriously  undervalued  the  shares, and  they  showed  no inclination to  engage  further, despite  pressure  from  some among  its  institutional  shareholders.

More to come on  this.

But  back  on the   market Infratil’s shares shot  up  nearly 20%  to $7.25  on trade  worth $20.4m. And analysts  see  plenty  more  action  coming up as Infratil  fever  deepens.

Meanwhile  energy stocks  have been  lifted by speculation  triggered by the  price  of aluminium climbing past $2000  a  tonne, raising the prospect that the  closure  of Tiwai Point  could be  pushed  back. Meridian,  as  the  key power  supplier  to  the  smelter,  has  seen   its shares   bounce  past  the  $7 mark.

Meridian reports  that, compared with  October 2019, it recorded double-digit higher segment sales in all but one of its business segments.

Elsewhere  Dunedin-based cancer diagnostics company Pacific Edge, which is  developing  a  lucrative  market in the  US  for its   CX  bladder  product, has   been  in the  spotlight  after  a  solid  recommendation from Jardens.  Its share price  has  risen from 69c  to  98c, with  3.4m  shares traded on Tuesday.

Then  rural services  firm  PGG Wrightson made a 10% gain (31c)  on  the  back of a strong  earnings outlook.

Clearly  it  could be  a merry  Christmas for  many  investors.

The  question is whether 2021  will bring as  much  happiness.

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