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MARKET CLOSE: NZ shares outperform Asia on persistent demand for reliable income

Tuesday 25th June 2019

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New Zealand shares outperformed the rest of Asia as blue-chip stocks including Fisher & Paykel Healthcare, Auckland International Airport and Mainfreight remained in demand among investors in search of reliable income. 

The S&P/NZX 50 Index rose 61.02 points, or 0.6 percent, to a record 10,388.31. Within the index, 21 stocks gained, 23 fell, and six were unchanged. Turnover was $89.8 million. 

The local market was the top performer across Asian benchmarks tracked by Refinitiv. The NZX50 has been buoyed by its heavy weighting towards utilities, infrastructure firms, and property investment companies, with investors paying a premium for reliable dividend income at a time when interest rates remain low around the world. The NZX50's average dividend yield at 4.62 percent is the third-highest across Asia behind Pakistan's Karachi 100 Index and Australia's S&P/ASX 200 Index. 

Peter McIntyre, an investment advisor at Craigs Investment Partners, said the pending rate review by the Reserve Bank was the major domestic event this week.

"I don't think anyone expects the trigger to be pulled. The commentary is the interesting part of that announcement," he said. 

Overseas news remains at the top of investors' minds with the upcoming meeting between the US and Chinese presidents at the end of this week a key focus, he said. 

That uncertain global economic outlook has meant shareholders have been reluctant to sell high-quality companies, with just five companies trading on volumes of more than a million shares today. 

F&P Healthcare led the market higher, up 2.7 percent at $145.46 on a volume of 177,000 shares, down on its 90-day average of 638,000. Auckland Airport rose 2.7 percent to $9.48, just shy of the $9.49 record it reached today, on a volume of 803,000, less than its 1.3 million average. Mainfreight advanced 2.4 percent to a record close $40.49 on a volume of 176,000 shares, more than three times its average of 55,000. 

McIntyre said the trend for lower interest rates continued to support those types of stocks. 

Mercury NZ was the most traded company on a volume of 1.9 million shares, more than twice its 663,000 average. It rose 0.2 percent to $4.26. Of other companies trading on volumes of more than a million shares, Kiwi Property Group was unchanged at $1.61, Fletcher Building increased 0.6 percent to $5.46, and Spark New Zealand decreased 0.3 percent to $3.95. 

Meridian Energy was unchanged at $4.73 on a volume of 1.2 million shares after saying it had signed a supply agreement with Australian online retailer 

Tourism Holdings rose 1.2 percent to $4.09 on smaller volume than usual of 114,000. The rental RV operator today said it will raise $80 million to strengthen its balance sheet. Of that, $30 million was through a placement to Chinese investment firm Citic, which will get a seat at the board, while the rest will be via a discounted rights offer. 

Growth stocks were among the worst performers, with Pushpay Holdings down 3.2 percent at $3.95 on a smaller volume than usual of 88,000 shares. Synlait Milk fell 3 percent to $9.52, and Vista Group International decreased 2 percent to $6. Chorus was down 2.4 percent at $5.78. 

Summerset Group's 2025 bond paying annual interest of 4.2 percent was the most traded debt security on a volume of 961,000. The notes closed at a yield of 3 percent, down 8 basis points. Summerset shares decreased 0.2 percent to $5.44. 


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