NZX 50 weakens as vaccine hopes weigh on Fisher & Paykel Healthcare

Thursday, 3 December 2020

The New Zealand sharemarket fell as progress on coronavirus vaccines weighed on stocks that have done well during the pandemic, like heavyweight Fisher & Paykel Healthcare.

The benchmark NZX 50 index slid 0.63 per cent, or 79.782 points, to 12,648.91 on Thursday.

Fisher & Paykel Healthcare, which has benefited from a surge in demand for its breathing aids during the pandemic and is the largest stock on the market, fell 3.3 per cent to $33.64.

Overnight, drugmakers Pfizer and BioNTech said they won permission for emergency use of their vaccine in Britain, which will be one of the first countries to begin vaccinating its population against the virus. The vaccine is the world’s first coronavirus shot that’s backed by rigorous science and a major step towards eventually ending the pandemic and helping economies return to normal.

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“The UK is pretty bullish about the timing of their shipments of vaccine,” said Sam Dickie, a senior portfolio manager at Fisher Funds. “While we are seeing markets look fairly flat on the surface, we are still seeing that big movement under the hood as people buy Covid losers, and they sell Covid winners.”

Optimism about vaccines prompted investors to sell stocks which had done well during the pandemic and buy those which would benefit from re-openings, Dickie said.

He noted the US Airline Index, which is a good indicator of stocks that would benefit from re-opening, was up about 2 per cent overnight, while Amazon, which was a big beneficiary of Covid-19, was down almost 1 per cent.

“That theme continues down here as well but because of our smaller market and the fact that some companies have got very big weightings, it looks like the market is weak on the surface, but really it’s because our biggest company Fisher & Paykel Healthcare was a Covid winner, so people are selling that down in response to the overnight lead.”

On the flip side, companies that would benefit from a vaccine, had gained.

Cinema software firm Vista Group International rose 1.2 per cent to $1.74.

“If we all get vaccinated we will all go back to the movies,” Dickie said.

National carrier Air New Zealand advanced 0.8 per cent to $1.875, while campervan company Tourism Holdings rose 2.8 per cent to $2.57.

– With AP