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MARKET CLOSE: NZ shares rise; Port of Tauranga, Meridian gain, Z Energy drops on inquiry threat

Wednesday 1st February 2017

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New Zealand shares gained slightly, treading water ahead of an earnings season where analysts are expecting weaker growth. Port of Tauranga and Meridian Energy gained while Z Energy dropped.

The S&P/NZX50 Index rose 4.76 points, or 0.07 percent, to 7,055.51. Within the index, 26 stocks rose, 14 fell and 10 were unchanged. Turnover was $103 million.

"The volatility from offshore is going to continue," said David Price, a broker at Forsyth Barr. "We're coming up to earnings season, there was quite a strong rally through January - up 2.5 percent - so I think we're coming into a results season that's going to have relatively anaemic revenue growth, 2 to 3 percent, and a lot of companies with negative growth, we're forecasting 18 of the 46 to have negative growth. With the re-rating, there will be quite a number of companies with a risk to the downside from this round."

Z Energy was the worst performer, down 2.2 percent to $7.12. Energy Minister Judith Collins yesterday indicated there could be an announcement made next week about an inquiry into rising petrol margins.

"It's had quite a bit of negative press in relation to margins, quite a tough-talking stance by Judith Collins," Price said. "Whether anything comes of it remains to be seen, it's quite hard to measure what they're talking about measuring in a consistent form in terms of the way the accounting gets done. It's probably more the focus on net after-tax earnings per litre than the headline margin number. The path of least resistance for that stock has been on the downside."

Restaurant Brands dropped 2.2 percent to $5.42 and Fletcher Building fell 1.6 percent to $10.33.

Port of Tauranga was the best performer, up 3.8 percent to $4.35. Meridian Energy gained 3 percent to $2.71 and Metro Performance Glass rose 2.2 percent to $1.89.

Trustpower rose 1.9 percent to $4.73 after the electricity generator and retailer said a substantial shareholder in its King Country Energy unit was reviewing its 20 percent stake in the Taumarunui power company.

Auckland International Airport increased 0.2 percent to $6.85 and Air New Zealand gained 0.5 percent to $2.11 after the US embassy confirmed dual-national New Zealand passport holders wouldn’t be held up at US borders.

Yield stocks, which offer investors steady dividends, gained after an unexpectedly high unemployment rate tempered expectations the Reserve Bank will raise interest rates. Goodman Property Trust was up 1.6 percent to $1.275, Stride Property increased 1.1 percent to $1.179 and Chorus advanced 1.4 percent to $4.11.

Outside the benchmark index, Opus International Consultants was unchanged at 95 cents ahead of the engineering firm’s annual earnings scheduled for tomorrow.

AWF Madison, the country’s biggest contract labour contractor, was unchanged at$2.70 after government data showed New Zealand’s unemployment rate unexpectedly rose to 5.2 percent in the December quarter as the participation rate increased to a record 70.5 percent and employment grew 0.8 percent.

Hellaby Holdings was unchanged at $3.57 after ASX-listed suitor Bapcor crossed the 90 percent threshold needed to take the NZX-listed diversified investment firm private.

Wellington Drive Technologies jumped 13 percent, or 2.3 cents, to 20 cents. The energy efficient motor maker said it posted positive earnings on sales growth out of Latin America.

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