AMP posts biggest market share gain after exiting life insurance

The stock market closed on a historic day that saw AMP sell off its remaining stake in its life insurance business, severing ties with the industry it once dominated after around 170 years.

The benchmark S & P / NZX 50 added 1.327 points, or 0.01%, to hit 12,993.83 on Wednesday.

AMP, which is double listed in Australia and New Zealand, was the biggest winner of the day, up 7.1% to $ 1.21.

“There was a bit of history today,†said Jeremy Sullivan, Hamilton Hindin Greene investment advisor. “AMP finally gave up its life insurance book.

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“They finally got rid of the monkey. “

AMP has lightened and reorganized its business after being tarnished by the Royal Banking Commission in Australia for practices such as billing dead customers and selling unnecessary products.

The sale was a milestone in the financial services industry, as AMP once held up to 70 percent of the New Zealand life insurance market, Sullivan said. Its shares are widely held because those who had AMP life insurance became shareholders of the company after its demutualization.

Sullivan noted that higher interest rates were weighing on the stock market.

Economists expect the Reserve Bank to raise the official treasury rate by 25 or 50 basis points when it issues its next monetary policy statement on November 24, in the second of what is expected to be a long series. increases.

“Higher interest rates mean that business values ​​go down,†Sullivan said. “If rates go up, it’s generally bad for stock valuation.”

A report by Stats NZ showed the unemployment rate fell to 3.4% in the third quarter, the lowest rate since the fourth quarter of 2007 and matching the lowest on record.

This pushed the currency up as traders bet that the Reserve Bank could raise interest rates more aggressively. The New Zealand dollar recently traded at 71.20c.

The prospect of a higher currency hurt the outlook for exporters, but was positive for importers.

“Having such a high dollar is not good for our exporting companies,†Sullivan said.

Ebos fell 1.3% to $ 35.53 and Mainfreight fell 1.1% to $ 87.03. Contrary to trend, Fisher & Paykel Healthcare rose 1.9% to $ 31.98.

Stocks were mostly down in Asia on Wednesday, weighed down by concerns over supply chains and disrupted shipments, despite the Dow Jones Industrial Average first closing above 36,000 points.

Benchmarks fell in most regional markets except Sydney and Taipei. Tokyo markets have been closed for a public holiday.

Investors await comments from the Federal Reserve’s policy meeting on Wednesday, when the central bank is expected to disclose plans to ease extraordinary support measures to support markets and the economy during the pandemic.

Fed Chairman Jerome Powell has signaled that the Fed will announce after its policy meeting that it will start slashing its US $ 120 billion (NZ $ 165 billion) monthly bond purchases as of this month. -this. These purchases aim to keep long-term loan rates low to encourage borrowing and spending.

– With PA