MARKET CLOSE: NZ shares rise before Brexit vote, led by Vital, Summerset; Nuplex drops

Thursday 23rd June 2016

New Zealand shares rose as markets speculated the UK will vote to remain in the European Union. Vital Healthcare Property Trust and Summerset Group gained, while Nuplex Industries dropped as its acquisition by Allnex may be delayed

The S&P/NZX 50 Index gained 39.6 points, or 0.6 percent, to 6,821.35. Within the index, 23 stocks rose, 17 fell and 10 were unchanged. Turnover was $122.3 million.

"There seems to be a bit more volume on the buy side - investors may be thinking that although the polls are calling it close, a lot of people are looking at how the bookies have been pricing it," said James Smalley, director at Hamilton Hindin Greene. "These guys are putting their money on the line, the professional punters certainly think the likelihood is Britain will stay and maybe that's the reason we're seeing some pretty good strength in our market today. The rest of the world had a pretty good bounce yesterday which we didn't see, so maybe we needed one more day to draw our investors out of the woodwork."

Brexit voting starts at 7am in the UK, or 6pm New Zealand time, and closes at 10am tomorrow morning NZ time.

Vital Healthcare led the index higher, gaining 2.6 percent to $2.185. It plans to raise $160 million to pay down debt, giving it headroom to pursue a pipeline of developments on both sides of the Tasman.

Summerset Group rose 2.3 percent to $4.40 and Fletcher Building gained 2.2 percent to $8.26.

Nuplex fell 1.5 percent to $5.27. US-based Allnex Belgium SA, which is buying Nuplex for $1.05 billion, has told Nuplex it is taking longer than expected to receive anti-trust clearance in the European Union. If the acquisition isn't completed by August 2 because of the clearance delay, that will trigger a compensatory dividend payment of 0.075 cents per share to be made by Nuplex to Nuplex shareholders for every day it is delayed, in addition to the $5.43 cash per share from Allnex.

"It's a potential spanner in the works - it's taken a bit longer to get approval, the arbitrageurs have obviously pulled back," Smalley said. "The name of their game is borrowing the money cheaply, buying at a very low transaction and getting the payment over a certain time period. Now that's created some uncertainty so they've pulled back. That's also going to allow them to pick up more stock cheaper."

Sky Network Television was the worst performer, down 2 percent to $4.83, while Heartland Bank dropped 1.6 percent to $1.26.

Outside the main index, Pumpkin Patch rose 4.6 percent to 6.8 cents. Director Josette Prince is the latest resignation from the ailing retailer's boardroom, with the company using her abrupt departure to affirm earnings guidance. The company affirmed guidance for normalised earnings before interest, tax, depreciation and amortisation to be between $2.8 and $3.4 million in the year ending July 31, a range it gave with its first-half results announcement in May.

CBL Corp gained 0.8 percent to $2.51. The credit surety and financial risk insurer plans to buy France's Securities and Financial Solutions Europe SA (SFS) for 94 million euros, taking over its biggest customer in a deal expected to lift earnings.

Michael Hill International was unchanged at $1.15. The shareholders have voted overwhelmingly in favour of a restructuring plan that would shift the jewellery chain into a new company incorporated in Australia and listed on the ASX. The existing shares are to go into a trading halt tomorrow, with the conversion of shares to those of the new Australian parent to take place at 6pm Brisbane time on June 29.

Intueri Education Group was unchanged at 35 cents. It must repay $1.47 million plus tax to the Tertiary Education Commission (TEC) after an investigation into its dive school showed some student enrolments between 2009–2014 could not be validated and some courses under-delivered against their funding agreement.

BusinessDesk.co.nz

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