MARKET CLOSE: NZ shares gain, led by Tower, Orion Health, A2 Milk

Thursday 8th December 2016

New Zealand shares rose as Tower extended its gains from a 16-year-low and Orion Health Group climbed, with global equity markets gaining ahead of an announcement from the European Central Bank overnight that may include an extension to its quantitative easing.

The S&P/NZX50 Index gained 26.24 points, or 0.4 percent, to 6,916.01. Within the index, 30 stocks rose, 14 fell and seven were unchanged. Turnover was $138 million.

Tower led the index, up 5.2 percent to 81 cents. The stock has risen 13 percent since Nov. 29, when the insurer said it will separate its liabilities and receivables from the Canterbury earthquakes into a separate 'bad bank' structure and "aggressively pursue" recoveries from the EQC and reinsurer Peak Re that amount to about $101 million. It's down about 60 percent this year, dragged lower by investor concerns over the long tail of earthquake costs.

"It's taken a fairly severe beating of late, the jury's really out in terms of what they can actually do in forming new-co, old-co, how that would actually work if they can get it to work," said David Price, a broker at Forsyth Barr. 'It's coming off a relatively low base and turnover's pretty light. The work-through is going to take quite some time."

The local bourse has gained along with global indices ahead of the final announcement from the ECB's president Mario Draghi, where he is anticipated to announce an extension of asset purchases by the central bank beyond March 2017.

"The market started pretty strong but has run out of a bit of puff - everything overnight was pretty buoyant ahead of Draghi tonight, without fail every market's got a nice green glow on," Price said. "I'd probably be a little more cautious myself, given what Draghi said to us last time which started the slide from basically the beginning of the end in terms of interest rates, but the markets have already decided that whatever gets said tonight will just be more medicine for the patient."

Orion Health rose 4.9 percent to $1.73, A2 Milk Co gained 3.4 percent to $2.44, and Sky Network Television advanced 2.8 percent to $4.80.

Infratil was the worst performer on the index, down 2.6 percent to $2.66. Spark New Zealand fell 1.8 percent to $3.535 and Auckland International Airport declined 1.5 percent to $6.295.

Units in Fonterra Shareholder Fund dipped 0.2 percent to $5.92. Fonterra Cooperative Group told shareholders at its annual meeting in Darfield today that the indicative payout level to its 10,500 farmer suppliers this season will be $6.40 per kilogram of milk solids.

Outside the benchmark index, Hellaby Holdings rose 0.3 percent to $3.46. Hellaby, which is engaged in a battle to fend off unwanted suitor Bapcor, has told shareholders it could move to break up the company to realise shareholder value. Australian car parts company Bapcor raised its offer to $3.60 a share earlier this week from $3.30, but the independent directors of Hellaby said they could not recommend the offer unless it included an 18 cents per share dividend. Bapcor refused and the Takeovers Panel has now ruled the offer price of $3.60 per share is a last and final offer.

NZME was unchanged at 55 cents while ASX-listed Fairfax Media gained 1.7 percent to 88 Australian cents. Fairfax, which plans to merge its New Zealand media business with rival NZME, confirmed speculation it had been approached by a third party about the acquisition of its New Zealand unit, but said it's not in talks with the potential buyer.

On the Unlisted platform, Blue Sky Meats was unchanged at $1.30. It has recommended shareholders wait for more information from the board on the future prospects of the meat processor before deciding on a takeover offer from China-based Heilongjiang Binxi Cattle Industry Co, which is at the top of an independent valuation range.

BusinessDesk.co.nz

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