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MARKET CLOSE: NZ shares join global rally on US-China trade optmism; SkyCity falls

Wednesday 13th February 2019

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New Zealand shares joined a global rally on optimism that the latest US delegation to Beijing will make meaningful gains in soothing the strained trade relations. Tourism Holdings led widespread gains; SkyCity Entertainment Group fell after reporting a decline in first-half profit and a share buyback. 

The S&P/NZX 50 index rose 0.6 percent to 9,333.38. Within the index, 36 stocks gained, 11 fell, and three were unchanged. Turnover was $180.2 million. 

Stocks across Asia largely followed Wall Street higher. with South Korea's Kospi 200 index up 0.4 percent, Hong Kong's Hang Seng gaining 1.1 percent and Singapore's Straits Times index advancing 1.2 percent. Investor sentiment was buoyed by the prospect of US policymakers avoiding another Federal government shutdown, and on optimism that US Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer will cut through some of the more intractable issues between the US and China. 

"People are more optimistic on the trade front and US President Donald Trump has back-pedalled a bit on his wall," said Greg Smith, head of research at Fat Prophets. 

Rental RV operator Tourism Holdings led the market higher, up 3.1 percent at $4.69 on a smaller-than-average volume of 92,000. Transport fuels firm Z Energy gained 2.3 percent to $6.14 on a lighter volume than usual of 655,000. 

Smith said the neutral stances adopted by central banks in the US and Australia were also stoking demand for stocks offering steady dividends. New Zealand's Reserve Bank adopted that stance today, pushing out its projection to raise the official cash rate by about half a year.

Mercury NZ was up 0.9 percent at $3.785 on a volume of 499,000, Meridian Energy gained 0.5 percent to $3.76 on a volume of 1.4 million and Genesis Energy gained 0.3 percent to $6.41 on a volume of 629,000. 

Smith said those Crown-controlled electricity generator-retailers were a good proxy for high-dividend-paying stocks, and had also benefited from favourable wholesale electricity prices. 

SkyCity dropped 4 percent to $3.83 on a volume of 2.4 million, compared to its 90-day average of 572,000. The casino operator reported an 11 percent decline in net profit to $82.8 million, in line with earnings guidance at the end of January. It also declared plans to buy back up to 5 percent of its outstanding shares over the coming year. 

Smith said the shares have been on the rise since December, and today's decline could be some profit-taking on those gains. 

Spark New Zealand was the most active stock, with a volume of 5.7 million shares, compared to its 3.7 million three-monthly average. It rose 1 percent to $4.095. Trade Me slipped 0.2 percent to $6.36 on a volume of 4.4 million, and Fletcher Building gained 1.9 percent to $5.26 on a volume of 2.6 million. 

Of other stocks trading on volumes of more than a million shares, Fonterra Shareholders' Fund fell 0.6 percent to $4.69, A2 Milk increased 0.9 percent to $13.57, Pushpay gained 1.6 percent at $3.25, Auckland International Airport was up 0.1 percent at $7.56, and Kiwi Property Group fell 1.4 percent to $1.43. 

Outside the benchmark index, Hallenstein Glasson Holdings gained 5.1 percent to $4.35 after flagging a gain in first-half profit after a stronger-than-expected Christmas trading period. 

Millennium & Copthorne Hotels New Zealand fell 0.7 percent after reporting a 15 percent increase in annual profit and a higher dividend, while signalling slower growth for 2019. Subsidiary CDL Investments New Zealand was unchanged at 85 cents. 

PGG Wrightson fell 1 percent to 47.5 cents. After the close of trading, the Commerce Commission approved the sale of its seeds business to Denmark's DLF Seeds. 


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