MARKET CLOSE: NZ shares extend gains with global equity markets; Fletcher, A2, ANZ rise

Thursday 21st April 2016

New Zealand shares rose to a fresh record as Fletcher Building reached a 10-month high on perceptions it has lagged the market's rally. A2 Milk, dual-listed Australia & New Zealand Banking Group and Westpac Banking Corp also rose while Meridian Energy fell.

The S&P/NZX 50 Index rose 4.8 points, or 0.1 percent, to 6,906.1. Within the index, 23 stocks rose, 18 fell and eight were unchanged. Turnover was $185.6 million.

Fletcher Building gained 2.2 percent to $8.45, a ten-month high and has risen about 13 percent this year.

"Notwithstanding that the stock's rallied, it's still trading at a significant discount compared to the rest of the market, and I think you'd also have to fold into that there's a pretty positive sentiment for property generally," said Stuart Williams, head of equities at Nikko Asset Management. "Their revenues have dominated out of New Zealand, which is doing pretty well relative to the rest of the world. It is a big liquid name and if people have a view about New Zealand they can play that relatively easily."

A2 Milk advanced 1.6 percent to $1.86. It dropped last week amidst uncertainty about changing regulations in China but has since rebounded.

"A2 is dealing with the machinations of what's happening in China regarding regulation or not regulation, and labelling or not labelling," Williams said. "In an overall sense, over the last month, it hasn't really gone anywhere. There's a lot of people who are looking at that, and if you think the market's becoming reasonably fully priced, stocks like A2 with really wide-open potential growth become a bit more compelling."

Australia & New Zealand Banking Group led the index, up 3.2 percent to $27.27, while Westpac Banking Corp rose 3.1 percent to $35, as Australia's S&P/ASX 200 Index gained 0.8 percent. Shares rose across Asia in the afternoon's trading after crude oil rallied overnight.

Ebos Group advanced 3.1 percent to $16.27, and Summerset Group Holdings was up 2.4 percent to $4.68.

Z Energy gained 2 percent to $7.25. The Commerce Commission's decision on whether to approve Z Energy's application to buy Chevron New Zealand's service station chain is due on April 29, having been delayed multiple times.

"If it was to go through, and that's a decent-sized question, there would have to be concessions because that's simply too big a market size for one consolidated player," Williams said. "If they're going to have close to 50 percent of the market that's not good for consumers. It simply becomes a matter of what are the mitigations that are required. It's taken a long time so there's obviously some big issues for the Commerce Commission to chew on, that's for sure."

Infratil rose 1.1 percent to $3.275. Its NZ Bus unit has inked a US$30 million deal with US-based Wrightspeed to enable it to transition its buses to electric technology. NZ Bus will receive its first Wrightspeed powertrains by mid-2016 and after fitting and testing, it expects to have the first electric-powered bus on the road by the last quarter of this year.

Nuplex Industries was unchanged at $5.23. The specialty chemical maker, whose shareholders will vote on whether to accept a $1.05 billion takeover offer later this year, has sold its Australasian pulp and paper chemicals business for A$21 million.

Metlifecare was unchanged at $5.34. It has sold its Wairarapa retirement village for $6 million as it focuses its expansion on the upper North Island.

Meridian Energy dropped most, down 2.4 percent to $2.67, while Kathmandu Holdings fell 2.3 percent to $1.70 and Air New Zealand declined 1.7 percent to $2.89.

Spark New Zealand shed 1.7 to $3.585, which Williams said was at the whim of international investors who like the yield story.

"Moving around 5 or 10 cents is nothing unusual for that name now, it doesn't reflect the underlying performance of the business, it just reflects the whim of whichever international investor happens to be going into or out of the stock," he said.

Outside the main index, New Zealand Oil & Gas rose 1 percent to 49 cents. The energy exploration company has upgraded the developed reserves at the Kupe field off the Taranaki coast and is still looking at ways to expand untapped reserves in the project. The gas and light oil field's developed reserve was lifted to 6.02 million barrels of oil from 5.22 million barrels and NZOG estimates there's likely to be an extra 3.6 petajoules of gas and 16.69 kilotonnes of LPG, the company said in a statement.

BusinessDesk.co.nz

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