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.
Point of Order 