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MARKET CLOSE: NZ stocks gain on China data, dividend plays

Friday 1st March 2019

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New Zealand shares rose, buoyed by firmer Asian markets, as investors sought out stocks with strong dividends due.

The S&P/NZX 50 index increased 26.65 points, or 0.3 percent, to 9,351.68. Within the index, 23 stocks rose, 22 fell, and five were unchanged. Turnover was $198.04 million.

Asian markets rallied after a February manufacturing index in China – the world’s second-biggest economy and New Zealand’s largest trading partner – was stronger than expected.

The Caixin/Market Manufacturing Purchasing Managers’ Index came in at 49.9 – signalling a third month of contraction – but better than the 48.5 expected in a Reuters poll of analysts and up from 48.3 in January.

Peter McIntyre, an investment advisor at Craigs Investment Partners, said the market started weaker and then caught up with Asian markets on the back of the China data.

It did well, given the earnings season largely wrapped up yesterday.

Fletcher Building, Fisher & Paykel Healthcare and Meridian Energy, particularly stood out today, with yield stocks among many of the gainers.

“Just about every stock that is higher today is carrying a dividend,” McIntyre said.

Fletcher Building may also be benefiting from some of the turmoil in the construction industry on both sides of the Tasman. With Arrow International the latest local firm to enter voluntary liquidation “who is left to do it?”

“It’s probably been a bit of bargain-buying in Fletcher, just on speculation they are likely to have a turn around in their earnings over the next 12 to 18 months.”

F&P Healthcare led the market, gaining 2.5 percent at $15.06, its highest close in almost five months. Almost 1.5 million shares changed hands, compared with average the past three months of 694,000.

The medical equipment maker has gained almost 13 percent in the week since it said it had concluded years of costly patent litigation with rival Resmed without payment or admission of liability by either party.

Fletcher Building rose 2 percent to $4.99 and was the second-biggest contributor the benchmark’s gain. It will pay an 8 cent dividend on March 22. Meridian Energy rose 1.4 percent to $3.74. It will pay 8.14 cents in dividends next month.

Spark New Zealand was again the most heavily traded stock, with a volume of 19.7 million shares changing hands, compared to its 4.3 million average. It rose 0.4 percent to $3.745.

Precinct Properties rose 0.3 percent to $1.505 with 3.3 million shares traded – more than three-times its average the past three months.

Kiwi Property Group rose 0.7 percent to $1.42, with almost 2.3 million shares traded, almost twice the average.

Among other stocks trading more than a million shares, Air New Zealand rose 0.2 percent to $2.475, its first gain in four days. The stock reached a 23-month low yesterday after reporting a 35 percent drop in first-half earnings. The 1.8 million shares traded was roughly twice the average.

Trade Me Group rose 0.2 percent to $6.40, the 1.4 million shares traded being close to average.

A2 Milk was unchanged at $14.31. The 1.3 million shares traded was a little ahead of its 1.1 million average the past three months.

Outside the benchmark index, fleet tracking specialist Eroad rose 13.8 percent to $2.39 after announcing a major US contract for about 4,900 of its EHUBO 2 units, most of which will be installed in the 2020 financial year. The company said its North American business will grow 30 percent this year and is now cashflow positive on a monthly basis.

NZ King Salmon rose 8.1 percent to $2.40. McIntyre said the investors were encouraged that the firm maintained its full-year earnings guidance yesterday.

Jeweller Michael Hill International rose 7.7 percent to 70 cents, its highest close in more than three months. Despite tough conditions in the September quarter, the firm raised its half-year margins in New Zealand and largely held them in Australia and Canada.


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