MARKET CLOSE: NZ shares rise, led by A2 after $40 mln placement; Contact, Meridian, MRP gain

Friday 9th October 2015

New Zealand shares rose, led by A2 Milk Co after it raised $40 million in an oversubscribed placement. Contact Energy, Meridian Energy and MightyRiverPower advanced.

The S&P/NZX 50 Index rose 13.01 points, or 0.2 percent, to 5638.79. Within the index, 23 stocks rose, 19 fell and eight were unchanged. Turnover was $190 million.

A2 jumped 8.3 percent to 78 cents after it raised $40 million in a placement to help fund planned growth in its infant formula business. The shares were halted at 72 cents, and were sold at 68 cents apiece in the capital raise.

"It got that placement away very easily and there were obviously some disappointed investors that couldn't participate or got scaled," said Grant Williamson, director at Hamilton Hindin Greene. "Everything is looking very good for them."

Markets across Asia followed Wall Street higher, with Japan's Nikkei 225 Index up 1 percent in afternoon trading, while Australia's S&P/ASX 200 Index gained 1.1 percent and Hong Kong's Hang Seng climbed 1.8 percent. Traders are pushing out their expectations for when the US Federal Reserve will start raising interest rates after running a near-zero policy since the global financial crisis.

Low interest rates make companies paying higher dividends more attractive and 'yield stocks' gained in local trading. Contact climbed 1.3 percent to $4.86. Meridian advanced 0.5 percent to $2.11. MRP rose 0.4 percent to $2.42. Genesis Energy was unchanged at $1.78.

"The American market is going up because investors have finally decided that the Fed won’t move on interest rates any time soon and that's certainly underpinned the equity market," Williamson said. "Demand has certainly come in again for the electricity generators today and I think mainly that's going to be investors chasing yield again. They had weakened off somewhat, so certainly the yield-chasing bargain hunters are into those."

The kiwi dollar is heading for a 3.7 percent gain against the greenback this week, with a stronger currency weighing on exporters' foreign earnings. Fisher & Paykel Healthcare, the breathing apparatus manufacturer and exporter, dropped 0.9 percent to $6.97.

Kathmandu Holdings, the outdoor goods retail chain, declined 2.7 percent to $1.44.

Xero, the cloud-based accounting software firm, was the worst performer on the benchmark index, down 3 percent to $16.

Spark New Zealand, formerly Telecom Corp, rose 1.8 percent to $3.06. Fletcher Building, the construction and building supplies firm, rose 1.3 percent to $7.16.

BusinessDesk.co.nz

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