MARKET CLOSE: NZ shares rise as investors hunt for yield, caution keeps lid on volumes

Tuesday 4th April 2017

New Zealand stocks were led higher by Meridian Energy as companies with high dividends remained in favour, although trading was light as a dearth of domestic and international drivers kept many investors on the sidelines.

The S&P/NZX 50 Index rose 20 points, or 0.3 percent, to 7,244.54. Within the index, 24 stocks rose, 16 fell and 10 were unchanged. Turnover was $166 million.

Asian markets saw light trading as investors were cautious ahead of a meeting between US President Donald Trump and his Chinese counterpart Xi Jinping later this week. Hong Kong's Hang Seng was up 0.6 percent while the across the Tasman the S&P/ASX 200 was down 0.3 percent. Asian markets also tracked a tepid move on Wall Street overnight, with the S&P 500 index down 0.2 percent, the Dow Jones Industrial Average down less than 0.1 percent and the Nasdaq Composite down 0.3 percent.

"Trading is pretty quiet but that seems to be the case around the world," said Bryon Burke, head of equities at Craigs Investment Partners. "I wouldn't want to read too much into the movements" given the light volumes, he said.

Electricity generator-retailer Meridian led the market higher, while lines company Vector also gained. "There's a bit of a bias toward the yield stocks today," Burke said, adding that gen-tailers were faring well. Meridian rose 3.2 percent to $2.89 and Vector added 1.6 percent to $3.20.

Property for Industry increased 0.6 percent to $1.62 after investors digested Monday's news the managers of PFI will reap a $42 million payday under a proposal for the industrial property investor to internalise the management contract, a deal Deloitte has deemed fair.

On the downside, Orion Healthcare continued to be battered after a series of brokerages downgraded their view on the stock and their 12-month target price. "We are just seeing order flow following those broker reports," said Burke. The stock shed 15 percent to $1.42. It had already dropped 14 percent Monday after the healthcare software developer said full-year sales fell but it still expects to post a narrower loss and be profitable in 2018. It has been in talks with potential investors in the business.

A2 Milk Company shed 2 percent to $2.98, which Burke said was probably on some profit taking given a recent strong run.

Sky Network Television was the biggest loser on the day, falling 3.1 percent to $3.76. Investors remain highly cautious after the Commerce Commission rejected its proposed merger with the New Zealand operations of the global telecommunications giant, Vodafone. The companies have lodged a High Court appeal against the decision.

Units in the Fonterra Shareholders Fund fell 1.8 percent, or 11 cents, to $6.01, after shedding the right to a 20 per share interim dividend. Investors will be keeping a close eye on the GlobalDairyTrade auction. Futures are pointing to virtually no change in whole milk powder prices, which make up the bulk of the auction.

Otherwise, Burke said markets are likely to continue treading water given a lack of drivers both at home and abroad. "We will look for leads from overseas, but it's just a quiet period at the moment," he said.

(BusinessDesk)

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