MARKET WRAP: NZ shares flat after mixed trading

The New Zealand market was flat today, as the market digested a strong period of growth.

The S&P NZX 50 index was down 3.13 points to 8996.24, on light turnover of $105 million.

Harbour Asset Management analyst Shane Solly says domestic and global economic growth lead indicators continue to show some slowing after the strong period of growth.

“Investors may also remain wary of twists and turns associated with a trade dispute between China and the US, and increasingly Europe and the US,” Mr Solly says.

In New Zealand, Kathmandu was a star performer after the company issued a substantial profit upgrade based on strong sales on both sides of the Tasman.

The outdoor clothing retailer said it expects net profit after tax to be in the range of $48-52m (up from $38m last year), for the year ended July 31, 2018. 

Kathmandu shares initially gained 8% to $2.70 on the news before climbing further to finish the day up 12% at $2.80.

Mr Solly says the “sharp movements” in weather have helped the business, which is getting more sophisticated about how it engages with its customer base.

“Certainly, there is a real trend toward outdoors,” he says.

Fletcher Building continued its climb after last week’s investor day, when it unveiled a new operating model, coming into force from July 1. It says the new model will reduce costs by $30 million a year, although it will also $85-95 million in one-off costs to the results for the year ending this month.

Today its shares gained 2.49% to $6.99.

Earlier today Auckland-based Serko listed on the ASX at $A2.60. The corporate travel booking software developer did a foreign exempt compliance listing and retains its primary listing on the NZX, where it gained 3.45% today to $3.00.

Precinct Properties shares gained 2.25% to $1.37 after it announced a $202m or 8.8% increase in the value of its property portfolio for the 12-months ended June 30, 2018.

Mr Solly says the gain was led by its Auckland assets but the value of Precinct’s Wellington portfolio has remained largely unchanged due to higher insurance premiums.

A2 Milk was down 2.51% to $11.65 after some profit taking having hit $12 last week after its supplier Synlait Milk announced expansion of its production facilities to meet demand. Synlait shares went in the opposite direction, with a slight 0.71% gain to $11.35.

Mercury shares dropped 2.49% to $3.33 after its recent gains on increasing profit forecasts.

The company recently lifted its FY2018 ebitdaf guidance from $540 million to $555 million thanks to improved hydrology.

Air New Zealand slipped slightly lower on higher oil prices. Last week Opec announced oil production increases that were less than expected, impacting Air New Zealand’s short-term profit expectations.

Its shares fell 2.49% to $3.19.

On Wednesday investors will be keeping an eye on the ANZ business outlook survey and on Thursday The Reserve Bank releases its latest Official Cash Rate (OCR) decision.

Mr Solly says Governor Adrian Orr may reiterate his comments from March, in which he said the OCR would remain unchanged "for some time to come".