MARKET CLOSE: NZ shares gain; A2, Kiwi Property rise, Hallenstein, retailers fall

Friday 5th February 2016

New Zealand shares rose, led by milk marketer A2 Milk Co and Air New Zealand, although the value of trading continued to be relatively light as volatility in world markets and commodities kept some investors on the sidelines. Hallenstein Glasson dropped after posting weaker first-half profit and most retailers fell.

The S&P/NZX 50 Index rose 16.09 points, or 0.3 percent, to 6,153.80. Within the index, 25 stocks gained, 14 fell and 11 were unchanged. Turnover was about $124 million.

Volatile world markets have weighed on the New Zealand bourse so far this year, with the NZX 50 down almost 3 percent. Stocks held for their relatively attractive dividends have been among the least affected, including property companies such as Goodman Property Trust - up 0.4 percent to $1.265 on the day and up 2 percent this year. Xero is the worst performer this year, falling 18 percent, although it gained 0.4 percent to $16.25 today.

"This year a pretty common market theme has been very low volumes," said David Price, a broker at Forsyth Barr. "I'd like to say it is quiet ahead of earnings season but there's been so much material damage in markets, in commodities, that people are more of a view to just wait. The expectation is there will continue to be a lot more volatility this year."

Excluding NZ Refining, Forsyth Barr is forecasting dividend growth of 10.5 percent this earnings season for New Zealand's biggest listed companies, and earnings per share growth on an aggregated basis of 9.7 percent. "The problem is our market is not cheap," he said. "On a price-to-earnings basis it is above its long-term average."

A2 gained 5.1 percent to $1.85 and Air New Zealand rose 3.8 percent to $2.90. Stock exchange operator NZX rose 2.9 percent to $1.05.

Hallenstein dropped 8.4 percent to $2.95 after the clothing retailer said first-half profit fell about 20 percent, and it will trim its interim dividend because a weaker New Zealand dollar and competition reduced margins.

Electronic card transaction data shows spending on apparel rose 0.7 percent in December, outpacing the total 0.3 percent gain for core retailing.

"Hallenstein not only under-performed that metric, they have done pretty poorly outright," Price said. "They had a shocker."

Among other retailers, Kathmandu Holdings declined 1.3 percent to $1.56, Briscoe Group fell 2 percent to $2.88 and Warehouse Group was down 1.1 percent to $2.70.

Ryman Healthcare rose 1 percent to $8.08, Chorus was up 1 percent to $3.87 and Mainfreight rose 1.1 percent to $15.16.

Among stocks held for their dividend yield, Kiwi Property Group rose 1.1 percent to $1.37, Mighty River Power gained about 1 percent to $2.625 and Property for Industry rose 0.3 percent to $1.63.

"People are happy to sit in yield," Price said.

BusinessDesk.co.nz

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