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MARKET CLOSE: NZ shares gain, led by A2 Milk, Sky TV; Ryman drops

Monday 6th March 2017

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New Zealand shares rose, with A2 Milk Co and Sky Network Television recovering from sell-offs, while Ryman Healthcare and Chorus declined.

The S&P/NZX50 Index gained 17.86 points, or 0.2 percent, to 7,178.73. Within the index, 28 stocks rose, 15 fell and seven were unchanged. Turnover was $102.3 million. 

A2 Milk led the index, up 4.6 percent to $2.51. The stock reached a record $2.60 before reporting its first-half earnings on Feb. 15, where it more than tripled first-half profit to $39.4 million as demand for its A2 Platinum infant formula surged in its key Australia, New Zealand and China markets.

"Clearly there were quite high expectations going into the result, and the share price rallied before that," said Craig Stent, director and research analyst at Harbour Asset Management. "As a consequence, despite them beating expectations and guiding up to a higher earnings, it sold off post result. So perhaps we're seeing people saying actually, this is a pretty good result so why aren't we buying this."

Sky TV rose 2.8 percent to $3.71. It was trading at $4.35 before Feb. 23, when the Commerce Commission rejected its proposed merger with the New Zealand operations of the global telecommunications giant, Vodafone. The shares plunged by as much as 17 percent on the day and had continued to weaken before today.

Freightways gained 2.4 percent to $7.25, Meridian Energy rose 2 percent to $2.79, and Westpac Banking Corp advanced 1.5 percent to $36.90.

Ryman Healthcare was the worst performer, dropping 3.2 percent to $8.61. Stent said quarterly rebalancing of the MSCI indices, effective Feb. 29, had played a part in the fall.

"You've got people that follow the index and do one thing, and you've got people who try to get ahead and then once it's happened they try to unwind it. In a less liquid market like New Zealand, it doesn't take much to move around a bit."

Chorus was down 1.2 percent to $3.99 while Genesis Energy fell 1.2 percent to $2.13.

NZX was unchanged at $1.12. Both cash trading volumes and the value of trading fell on the NZX in February, when the bulk of the country's biggest listed companies announced earnings. While both metrics were down on the year they gained versus January as reporting season got underway. 

Outside the benchmark index, CBL Corp gained 3.7 percent to $3.34. The shares had fallen to a six-month low last week after the credit surety and financial risk insurance company posted full-year earnings that missed some market expectations and included one-time costs that weren't projected in its prospectus.

"There's not necessarily anything broken with the business, it's just that enforced reporting season shines a light on some numbers," Stent said. "They've made some acquisitions over the past twelve months, I think there was one seller that was trying to exit the stock and that's put undue pressure on and it got sold off."

Abano Healthcare was unchanged at $8.90. Peter and Anya Hutson and James Reeves' latest attempt to wrest control of Abano has failed, with the partial takeover falling well short of the 50.01 percent level needed. 

Veritas Investments was unchanged at 31 cents. It said it has reached a confidential settlement with Phil Mead, a former franchisee in the Nosh group who sought to terminate his franchise agreement after buying the business just days before Veritas disclosed it was under pressure from its bank to sell the upmarket supermarket chain.


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