MARKET CLOSE: NZ shares gain as investors 'buy the rumour'; MRP becomes Mercury

Friday 29th July 2016

New Zealand shares rose to a fresh record, led by Comvita and Fletcher Building.

The S&P/NZX 50 Index rose 49.26 points, or 0.7 percent, to 7,355.61. Within the index, 26 stocks rose, 16 fell and nine were unchanged. Turnover was $164 million.

James Smalley, director at Hamilton Hindin Greene, said there was a bit of "buy the rumour" happening in the market, with stocks bought up ahead of reporting season.

"It appears the market does have a reasonable amount of momentum heading into reporting season, and some shares prices are starting to look stretched on the fundamentals," Smalley said. "Investors will be looking for guidance and a good result doesn't necessarily mean a good share price reaction. That will be the main risk investors want to keep an eye on."

Comvita led the index again, up 4.6 percent to $11.27. The stock has gained 28 percent this year but dropped to a three-month low of $10.35 on Tuesday. Smalley said the stock was thinly traded and was probably bouncing back after profit-taking.

Fletcher Building gained 2.4 percent to $9.69, a price not seen since April 2014. It's advanced 29 percent this year as expectations of residential construction, particularly in Auckland, have increased. Fletcher also today announced it paid $12 million below the flagged purchase price to buy rival construction company Higgins Group Holdings after dropping Horokiwi Quarries from its application to reduce its dominance in the aggregates market.

Auckland International Airport rose 2 percent to $7.38, an all-time high. Smalley said it and other infrastructure stocks such as Sydney Airport had come into favour with investors in a low interest rate environment.

Trading for the first time under its new name, Mercury New Zealand rose 1.3 percent to $3.13. Formerly known as Mighty River Power, the company has combined its generation arm and its retail arm, Mercury Energy, into one and has a new NZX ticker: MCY.

Genesis Energy advanced 1.8 percent to $2.22 while Spark New Zealand gained 1.7 percent to $3.945. New Zealand Oil & Gas gained 2.2 percent to close at 46 cents after a relatively positive quarterly production and cashflow update.

NZX fell 1 percent to $1.02, as did Trade Me Group at $5.12, while Fisher & Paykel Healthcare fell 0.9 percent to $10.50.

Outside the main index, Moa Breweries' chairman Ashley Waugh assured shareholders at the annual meeting that the company has no "specific plans for corporate activity to talk about", harking back to a 'please explain' notice on July 13 following a 47.5 percent jump in the share price to 87 cents. The shares were trading up slightly at 90 cents today.

Veritas Investments was unchanged at 43 cents. The company said annual earnings declined as expected and it will provide more detail of how its three food and beverage businesses are tracking when it formally reports next month.

OceanaGold dropped 0.6 percent to $5.05. The Melbourne-based gold and copper miner posted a 174 percent gain in first-half profit, reflecting a recovery in the price of gold and increased production that reflected the contribution from the Waihi mine acquired last year.

BusinessDesk.co.nz

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