Sharemarket falls as investors sell rising stocks for a profit

Monday, 11 January 2021

Investors took advantage of higher stock prices to sell their shares for a profit, pulling down the benchmark index.

The New Zealand sharemarket fell as investors took advantage of elevated stock prices to sell some of their holdings for a profit.

The benchmark S&P/NZX 50 Index slid 268.104 points, or 1.98 per cent, to 13,290.09 on Monday.

“There has been a fair amount of profit taking in the market,” said Grant Williamson, an investment adviser at Hamilton Hindin Greene.

“It really has been a case of local investors taking profits, in particular the electricity stocks which have had a fantastic run.”

Meridian’s share price has surged in recent times as investors piled into green energy stocks.

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Summerset achieved record sales for the last quarter of 2020.

Meridian Energy, whose shares have gained 13 per cent over the past month and 74 per cent over the past year, fell 7.9 per cent to $8.42.

Contact Energy, which has jumped 13 per cent over the past month and 48 per cent over the past year, dropped 6.6 per cent to $10.04.

Shares in the two energy companies have surged over the past month as United States investors piled into green energy investments following the election of Joe Biden, prompting exchange traded funds to buy more shares in the underlying assets during the Christmas and New Year period when liquidity was low.

Williamson said other stocks had also come under pressure from profit taking.

Shares in courier company Freightways, which have gained 24 per cent over the past year, slid 1.9 per cent to $10.30.

Telecommunications network company Chorus, whose shares are up 25 per cent over the past year, dropped 2.8 per cent to $7.825.

Infrastructure investor Infratil, which is up 43 per cent over the past year, slid 2.1 per cent to $7.32.

Retirement village operator Summerset Group announced on Monday that it achieved record sales for the last quarter of 2020.

Summerset recorded 296 sales of occupation rights for villas, units and serviced apartments in the quarter ending December 31, 2020, comprising 176 new sales and 120 resales. That is the strongest quarter sales result in Summerset’s 23-year history.

Shares in the company edged lower by 0.6 per cent to $12.56.

While the company was meeting expectations, the share price had probably got ahead of itself, Williamson said.

Elsewhere in Asia, shares mostly rose as bullish sentiment stuck to global markets despite continuing signs of economic damage from the pandemic and a new version of the virus was reported in Japan.

Traders continued to be cheered by prospects that the incoming administration of President-elect Joe Biden will pump more aid into the US economy, a move that will help Asia and other export-driven nations.

South Korea's Kospi jumped 2.5 per cent in early trading to 3230.15. Australia's S&P/ASX 200 lost 0.7 per cent to 6714.20. Hong Kong's Hang Seng edged up 0.2 per cent to 27,945.18, while the Shanghai Composite added 0.4 per cent to 3584.97.

Japanese markets were closed for a national holiday. Adding to concerns over surging numbers of coronavirus infections, another new variant of the virus was reported over the weekend among several people who had arrived from Brazil.

Wall Street ended last week with more milestones, largely shrugging off another discouraging jobs report. The S&P 500 rose 0.5 per cent, its second straight record high. The Dow Jones Industrial Average and Nasdaq composite all closed at new highs.

– With AP