MARKET CLOSE: NZ stocks hit record, led by A2 Milk, Metlifecare and Meridian Energy

Wednesday 7th September 2016

New Zealand shares rose to another record high, driven by investors seeking dividend income, with A2 Milk continuing its bounce and Meridian Energy at an all-time high.

The S&P/NZX 50 Index gained 67.56 points, or 0.9 percent, to 7,571.1. Within the index, 34 stocks rose, 12 fell and four were unchanged. Turnover was $187.8 million.

"The market's trading with really good volume today, it seems to be the stocks that are trading with rights to an upcoming dividend that are tending to drive the index higher - investors are certainly jumping on board and purchasing those shares," Peter McIntyre, investment adviser at Craigs Investment Partners, said. "Reporting season was quite good and the continuation of dividend looks quite strong, so those stocks have been well-supported today."

A2 Milk led the index, up 5.1 percent to $2.06. It dropped 17.8 percent to $1.89 over eight trading sessions after its full year results were released in late August when it announced a return to full-year profit and a 127 percent jump in revenue that was driven by infant formula sales in Australia and China, but has bounced 9 percent this week.

"It's been briskly traded today, that's a continuation of a strong week for them after being sold off about concerns about US growth and how they're going to put that into action," McIntyre said. "It's one that bounces around a lot, then when it gets traded below $2 it gets well-bidded again and heads back up."

Metlifecare gained 3.1 percent to $6.39. The retirement village operator expects to buy at least one new site in the 2017 financial year to accelerate its development programme and make the most of growing demand in the retirement village sector. In an investor update to the NZX this morning, chief executive Glen Sowry said Metlifecare will deliver 229 new units and care beds in 2017, increasing to a minimum of 300 new units or beds by 2019.

Trade Me Group rose 2.5 percent to $5.86, Genesis Energy advanced 2.2 percent to $2.30 and Steel & Tube Holdings, which is soon to leave the NZX 50, gained 2.2 percent to $2.32.

Meridian Energy was up 2 percent to $3.05, an all-time high.

Fletcher Building rose 2 percent to $10.99.

"There's some analysis out of Australia saying within the construction sector it's a preferred stock and I think that's driven it higher," McIntyre said. "It continues a stellar run over the last six months, they look as though they've got their house in order, they're streamlining their business and they're a bit of a darling at the moment."

Stocks giving up rights to dividends fell most today, with Goodman Property Trust down 2.5 cents to $1.38 - its dividend was 1.663 cents - while Vector, whose dividend is 8 cents, dropped 3 cents to $3.43.

New Zealand Refining, which gave up rights to a 3 cent dividend, dropped 2 cents to $2.31.

Outside the main index, NZME gained 5.5 percent to 77 cents. The media company today said it will pay $55 million in cash and issue shares giving Australia's Fairfax Media a 41 percent stake if the planned merger of New Zealand's dominant publishers is given the go ahead.

"It's on low volumes really, but it's provided some flavour around the merger, some pro-forma data around earnings particularly around ebitda and provides payout ratios and talks about banking facilities," McIntyre said. "The merger's a fair way off at this stage, and I don't think the market's necessarily expecting the Commerce Commission to just rubber stamp this."

Mercantile Investments was unchanged at 15.3 cents. Ron Brierley's investment vehicle has increased its stake in cashed-up former Wellington department store Kirkcaldie & Stains to 11.3 percent as he seeks to take control of its remaining assets.

BusinessDesk.co.nz

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