MARKET CLOSE: NZ shares rise on yield demand; Spark, Fletcher, Meridian gain

Monday 7th September 2015

New Zealand shares rose on demand for dividend paying stocks ahead of what's widely expected to be an interest rate cut by the Reserve Bank this week. Spark New Zealand, Fletcher Building and Meridian Energy advanced.

The S&P/NZX 50 Index rose 25.85 points, or 0.5 percent, to 5572.73. Within the index, 28 stocks rose, 17 fell and five were unchanged. Turnover was $105 million.

Governor Graeme Wheeler is expected to cut the official cash rate by a quarter point to 2.75 percent with the quarterly monetary policy statement on Thursday, according to all 11 economists in a Reuters survey. The prospect of lower rates has drawn investors to equities, and underpinned the local bourse despite offshore volatility.

Income paying stocks rose. Spark, formerly Telecom Corp, advanced 1.4 percent to $3.215. Fletcher, the construction and building supplies firm, rose 1.3 percent to $7.04. Meridian, the government controlled energy company, climbed 0.7 percent to $2.165. Tower, the general insurer, rose 1.5 percent to $2.06.

"Investors wanting returns and income are looking more towards equity market rather than the term deposits and with another interest rate cut on the horizon it's pretty much understandable," Grant Williamson, director at Hamilton Hindin Greene said. "A lot of these people switching from fixed interest to the share market are not natural equity investors, so they'll be looking at the more conservative stocks that offer good income."

A2 Milk Co, the milk marketing company, led the benchmark index higher up 5.9 percent to 72 cents.

Sky Network Television, the dominant pay-TV provider, rose 1.5 percent to $4.65, rebounding from a three year low.

Pacific Edge rose 4.4 percent to 48 cents, but has fallen 25 percent over the past three months. On Friday, in its quarterly indices update, NZX announced the biotech firm would be removed from the benchmark index and replaced with New Zealand Refining. NZ Refining rose 0.9 percent to $3.25.

Orion Health Group, the health care management software developer, was the worst performer on the benchmark index down 3.5 percent to $3.55.

Kathmandu Holdings, the outdoor goods retail chain, fell 3.1 percent to $1.58.

Outside the benchmark index, Rubicon fell 3 percent to 32 cents. The forestry biotech company said will "vigorously appeal" any decision over a US-based employee complaint against its part-owned seedling company, ArborGen.

SeaDragon fell 11 percent to 0.8 cents. The fish oil refiner has extended its three-for-five renounceable rights offer and shortfall book build by two weeks following expressions of interest from potential strategic investors.

BusinessDesk.co.nz

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