/cloudfront-ap-southeast-2.images.arcpublishing.com/nzme/TUHUKPAZSG4J6ZDAFYASMYQDSQ.jpg "Market close: Mini-Budget fails to lift NZ sharemarket")
Shares in KMD Brands declined 3c to 74c after reporting group sales fell 12.5 per cent for the first four months of the 2024 financial year. Photo / NZME
The New Zealand sharemarket had a late fall, unable to be inspired by the half-year economic update and mini-Budget, which lacked Christmas cheer.
The S&P/NZX 50 Index seemed to be heading towards its
third flat day in four till the matching session and closed at 11,579.8, down 37.57 points or 0.32 per cent.
There were 80 gainers and 45 decliners over the whole market on volumes of 36.34 million share transactions worth $95.09m.
Greg Smith, head of retail at Devon Funds Management, said there weren’t a lot of surprises in the mini-Budget.
“Austerity is back in fashion as the new Government looks to trim the fat,” Smith said.
The coalition Government outlined $7.5 billion in cuts and savings over the next four years, as well as committing to annual public service cuts of $1.5b, amounting to $6b in the four-year period.
In its Half Year Economic and Fiscal Update, the Treasury forecast average gross domestic product growth of 1.5 per cent over the next two years, compared with 3.3 per cent in the year to June.
A surplus is still expected in 2026-27 but at a much lower $240m than the $2.07b forecast in September.
Inflation is predicted to be 4.1 per cent by June next year before falling towards 2 per cent, and unemployment is forecast to increase to 4.5 per cent and peak at 5.2 per cent in June 2025.
ANZ Research said there was very little wiggle room in the outlook when it comes to the overdue fiscal consolidation, and it’s very likely hard choices will need to be made to deliver tax relief and get the books back in balance by 2026-27.
“But faced with the trade-off between delaying the forecast return to surplus and deeper spending cuts, we think the new Government is likely to preserve the surplus, unless a big shock comes along. All up, we’re not a lot wiser after today’s release,” the bank said in a report.
“The increase in bond issuance was a couple of yards more than expected, reflecting changes to economic and financial conditions, as opposed to policy choices.”
The bond issuance has been lifted $7b overall – with the bank expecting a $5b increase to June 2027.
On the market, KMD Brands declined 3c or 3.9 per cent to 74c after reporting that group sales fell 12.5 per cent for the first four months of the 2024 financial year because of “ongoing weakness in consumer sentiment”.
Kathmandu sales were down 21.6 per cent, Rip Curl surfwear dipped 5.7 per cent and Oboz footwear dropped 18.2 per cent. Group operating earnings (ebitda) were $16m below the same period last year, but the gross margin had improved.
Smith said retailers were entering a very crucial period and relying on a strong end to the year. “Consumers are fragile and reining in their spending. Card spending is expected to show a 4 per cent decline year-on-year, and there just might be a retail grinch.”
Other retail stocks Briscoe Group declined 14c or 3.01 per cent to $4.51, and The Warehouse was down 6c or 3.59 per cent to $1.61. Shopping centre owner Kiwi Property shed 1.5c or 1.72 per cent to 85.5c.
Fisher and Paykel Healthcare was down 34c to $23.76; Mercury Energy shed 19c or 2.88 per cent to $6.41; Auckland International Airport gave up 10c to $8.50; Napier Port decreased 6c or 2.44 per cent to $2.40; Gentrack fell 19c or 2.79 per cent to $5.62; and Sky TV declined 6c or 2.2 per cent to $2.67.
Other decliners were Foley Wines, down 4c or 3.42 per cent to $1.13; Heartland Group, decreasing 5c or 3.27 per cent to $1.48; Millennium & Copthorne Hotels NZ shed 6c or 3.13 per cent to $1.86; and Booster Innovation fell 4.7c or 2.8 per cent to $1.63.
Genesis Energy increased 9.5c or 3.88 per cent to $2.545; a2 Milk gained 9c or 2.02 per cent to $4.54; NZME increased 3c or 3.26 per cent to 95c; Serko improved 8c or 1.96 per cent to $4.16; Tourism Holdings rose 16c or 4.4 per cent to $3.80; and Scott Technology collected 18c or 5.77 per cent to $3.30.
Other gainers were NZ King Salmon Investments, up 1c or 4.55 per cent to 23c; 2 Cheap Cars increasing 2c or 2.35 per cent to 87c; Eroad improving 4c or 3.96 per cent to $1.05; and Pacific Edge up 0.007c or 8.86 per cent to 8.6c.
