MARKET CLOSE: NZ shares gain, led by Stride Property, A2 Milk ahead of Fed rate announcement

Monday 19th September 2016

New Zealand shares rose as some investors rummaged for bargains left over from last week's sell-off, with decisions on interest rates in the United States and Japan expected to dominate trading this week. Stride Property, A2 Milk Co, and NZX led the index.

The S&P/NZX 50 Index rose 27.6 points, or 0.4 percent, to 7,278.12. Within the index, 24 stocks fell, 21 rose and five were unchanged. Turnover was $111.3 million.

The local bourse dropped back nearly 3 percent over the course of last week as investors took their lead from a Wall Street share slump driven by growing expectations that the Federal Reserve would resume hiking interest rates. The Fed's announcement is due Thursday morning local time, the same day New Zealand's Reserve Bank will review its cash rate.

"Everyone's looking to the policy meetings overseas, that's where the volatility has come from recently," Robert Garden, investment adviser at Craigs Investment Partners, said. "The Bank of Japan is having their policy meeting too. Those things are raring up after a period of pretty benign, good market trading since the UK vote. The market has ticked along pretty nicely since then - valuations are looking a bit pricey and a situation like that can be used to justify a bit of sell off."

Property stocks which were sold off last week gained today, with Stride Property leading the index, up 3.1 percent to $2.01, and Kiwi Property Group rose 1.7 percent to $1.49.

"Any rate rises are going to be gradual and we're not going to be making any moves here," Garden said "So there are some investors thinking that they look like reasonable buying after that pullback last week. With what's on the horizon, I think we're going to see continued volatility til the end of the year, driven by news from overseas."

A2 Milk advanced 2.6 percent to $1.95, NZX gained 1.9 percent to $1.08, and Warehouse Group lifted 1.7 percent to $2.93.

Tegel Group Holdings was the worst performer, down 2.9 percent to $1.68. Tower dropped 2.5 percent to 99 cents, Vista Group International fell 2.2 percent to $6.60, and Scales Corp dropped 1.8 percent to $3.30.

Outside the main index, Briscoe Group rose 1 percent to $3.87. The homewares retailer lifted first-half profit by 33 percent and hiked its interim dividend after widening gross margins with more rigorous inventory management and boosting sales.

Managing director Rod Duke, who owns about 78 percent of the company, said margins in the second half of the financial year will come under pressure as the New Zealand dollar depreciates, making imports more expensive, while the period is one week shorter than the second half of 2015.

"They're still reasonably optimistic about their outlook, and out of any of the retail stocks in New Zealand, Briscoes has been a pretty steady performer," Garden said. "It's definitely been the pick of the bunch in the retail side of things over the last three or four years."

Synlait Milk was unchanged at $3.62. The NZX-listed dairy company almost tripled annual profit to $32.7 million, in line with its forecast, although it warned growth in the coming year would be more modest as new Chinese regulations disrupt infant formula sales.

BusinessDesk.co.nz

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