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MARKET CLOSE: NZ shares gain as power companies Meridian, Genesis, Mercury buoyed by low rate outlook

Tuesday 12th February 2019

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New Zealand shares gained as growing bets for an interest rate cut by the Reserve Bank stoked demand for utility companies such as Mercury NZ, Meridian Energy and Genesis Energy with steady dividends. 

The S&P/NZX 50 index rose 70.77 points, or 0.8 percent, to 9,280.77. Within the index, 33 stocks gained, nine fell and eight were unchanged. Turnover was $187.6 million, of which Spark New Zealand accounted for $62.5 million. 

Stocks across Asia rose after US legislators reached an in-principle funding deal to avoid another Federal government shutdown. Australia's S&P/ASX index was up 0.3 percent in afternoon trading, while Japan's Topix gained 2.2 percent and China's Shanghai Composite Index rose 0.7 percent. 

"There's a bit of optimism around the Americans putting together something to avoid the shutdown at the end of the week," said Mark Lister, head of private wealth research at Craigs Investment Partners. 

The Reserve Bank's policy review tomorrow also supported the local market today, as traders increasingly price in lower interest rates over the coming year. Lister said that boosted companies with "highly attractive and sustainable dividend yields" such as the electricity generator-retailers, property stocks and other utilities. 

Mercury led the market higher, up 2.7 percent at a record close $3.75 on a volume of 752,000 shares, slightly more than its 90-day average. Genesis rose 2.6 percent to $2.76 on a volume of 1.4 million shares, compared to its 334,000 average. Meridian gained 2.5 percent to a record close $3.74 on 663,000, half its average volume. 

Goodman Property Trust rose 2.2 percent to $1.66 on a volume of 615,000, slightly more than average, while infrastructure investor Infratil was up 0.9 percent at $3.99 on a volume of 1.5 million, more three times its usual volume. 

Contact Energy, which yesterday reported increased earnings and a bigger-than-expected dividend, gained 1.1 percent to $6.39 on a volume of 974,000. 

Lister said Contact had underperformed other power companies in recent years, but that yesterday's result was "pretty solid". 

Spark New Zealand was the most traded stock on a volume of 15.4 million, more than twice its 90-day average of 3.5 million. It gained 0.8 percent to $4.055. Trade Me was unchanged at $6.37 on a volume of 3.3 million and A2 Milk gained 0.4 percent to $13.45 on a volume of 1.8 million. 

Among other companies trading on volumes of more than 1 million, Precinct Properties New Zealand rose 0.7 percent to $1.53, Kiwi Property Group was unchanged at $1.45 and Chorus closed at a record $5.16, up 0.8 percent. Fletcher Building rose 1.4 percent to $5.16 and Z Energy was up 0.7 percent at $6. 

A weaker kiwi dollar was also a boon for exporters. Fisher & Paykel Healthcare increased 0.5 percent to $13.74, Sanford rose 1.2 percent to $6.85, both on smaller volumes than average. Scales Corp was up 1.1 percent at $4.45 on slightly bigger volumes than normal. 

Pushpay Holdings posted the biggest decline, falling 3.6 percent to $3.20 on half its average volume, while Heartland Group decreased 1.5 percent to $1.36 on a smaller-than-usual volume of 258,000. 

Outside the benchmark index, Allied Farmers climbed 13 percent, or 0.9 cents, to 8.1 cents, after the rural services company yesterday affirmed earnings guidance for a strong first half and satisfactory annual profit. 

South Port New Zealand was unchanged at $6.50 after reiterating annual earnings guidance when reporting a 7 percent decline in first-half profit. The port operator is hoping to provide extra services to the Tiwai Point smelter, which re-opened a fourth pot-line last year.


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