MARKET CLOSE: NZX50 at fresh record on yield hunger; Spark, Fletcher, AIA advance

Tuesday 3rd November 2015

New Zealand shares rose to a fresh record as investors sought dividend-paying stocks. Spark New Zealand, Fletcher Building and Auckland International Airport advanced.

The S&P/NZX 50 Index gained 38.14 points, or 0.6 percent, to 6021.98. Within the index, 28 stocks rose, 16 fell and six were unchanged. Turnover was light at $98.5 million.

The NZX 50 rose about 7 percent in October, the biggest monthly gain since July 2009, touching new records as volatility in international markets abated, renewing demand for equities in a low interest rate environment. Across the Tasman, the Reserve Bank of Australia kept interest rates on hold at 2 percent, but Governor Glenn Stevens indicated rates would be cut in the future.

Blue chip kiwi stocks rose, as offshore investors looking for yield were lured to the local market. Spark, the telecommunications provider held by international investors for its liquidity, advanced 1.8 percent to $3.45, its highest since February. Fletcher Building, the construction and building supplies firm, gained 1.9 percent to $7.47. Auckland International Airport, New Zealand's largest listed company, climbed 2.4 percent to a three month high of $5.53.

"It looks relatively positive," said James Smalley, director at Hamilton Hindin Greene. "Although he hasn't cut, the commentary is still relatively dovish. Rates will be lower for a while."

Genesis Energy gained 0.3 percent to $1.88. Meridian Energy rose 0.5 percent to $2.205.

Xero led the benchmark index higher, up 4.4 percent to a three month high of $16.70. On Friday, the cloud-based accounting software developer slowed its quarterly cash burn in the September quarter as customer receipts rose at a faster pace than its wage costs.

"There are a few buyers in there today," Smalley said.

Trustpower fell 1.2 percent to $7.65 after it offered a "fair price" in its $126.6 million takeover of King Country Energy, a bolt-on acquisition that will lift the utility company's customer base by about 7 percent and adding significant electricity generation capacity. The transaction was "interesting and positive" for Trustpower and was at a fair price, especially as Trustpower "trades on much higher multiples than King Country Energy does," said Paul Harrison, who helps manage more than $700 million of New Zealand and Australian equities at Salt Funds Management.

Westpac Banking Corp rose 3.3 percent to $33.45. The lender's New Zealand unit wants to match growth in the wider mortgage market in 2016 in what local chief executive David McLean expects will show slower expansion as heat in the Auckland housing market starts to abate.

Skellerup Holdings, the rubber goods firm, was the worst performer on the benchmark index, down 3.3 percent to $1.49.

BusinessDesk.co.nz

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