MARKET CLOSE: NZX 50 charts new record as A2 Milk extends rally; Air NZ falls as yields weaken

Tuesday 24th November 2015

New Zealand shares rose, pushing the NZX 50 Index to a new record close, as a2 Milk extended its rally and Chorus gained. Air New Zealand fell after releasing monthly operating statistics.

The S&P/NZX 50 rose 23.65 points, or 0.4 percent, to 6101.27. Within the index, 24 stocks rose, 19 fell and seven were unchanged. Turnover was $191 million.

A2 Milk led the index higher, gaining 12 percent to $1.22, an all-time high. The stock has risen 88 percent this year, after starting to rally in mid November as Chinese demand for Australian infant formula outstripped production and investors bet the end of China's one-child policy will underpin sales.

"A2 upgraded their earnings last week and they've had an incredibly sharp rise," said Nick Dravitzki, equity analyst at Devon Funds Management. "Australian-listed food producers selling into China have seen their share prices rise very strongly and it does look like that enthusiasm has extended to A2."

Chorus rose 3.3 percent to $3.10, a five-month high. The regulated telecommunications network operator is awaiting the outcome of the Commerce Commission's pricing review of its copper lines. Regulatory events have tended to drive Chorus' price for a number of years, Dravitzki said.

Utilities rose 1.1 percent as a group, with Genesis Energy up 3.1 percent to $1.97, Meridian Energy rising 2.6 percent to $2.33, and Mighty River Power advancing 1.4 percent to $2.83.

Air New Zealand fell 2.2 percent to $2.73, after the airline released its operating statistics today.

"Numbers today were pretty solid but yields were slightly weaker - you don't want that to be a trend which persists," Dravitzki said. "Earning high yields over a long period of time on routes is difficult because competition tends to follow highly profitable air routes and it's very easy for competition to come in. It's possible some shareholders saw something in the operating stats they didn't expect and didn't particularly like, it's about people taking a view on the direction."

Tower was unchanged at $1.97. The general insurer posted an annual loss as it prepares for more expensive claims from the Canterbury spate of earthquakes, but raised its dividend payout to reflect a stronger underlying earnings performance.

Among smaller stocks, Cavalier Corp rose 34 percent to 55 cents. The New Zealand carpet maker expects annual earnings to rise this year as it restructures its business to boost profitability.

NPT was unchanged at 63 cents. The property investor increased first-half earnings 6.1 percent as rental income from its retail buildings boosted revenue, while a lift in the value of its overall property portfolio almost doubled profit.

BusinessDesk.co.nz

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