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MARKET CLOSE: NZX50 knocking on 10,000; retirement stocks Metlifecare, Summerset rally on ditched CGT

Thursday 18th April 2019

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New Zealand shares hit a new record as retirement village operators including Summerset Group and Metlifecare rallied on the government's decision to ditch a capital gains tax. 

The S&P/NZX 50 Index rose 73.85 points, or 0.7 percent, to a record 9,982.24. Within the index, 32 stocks gained, eight fell, and 10 were unchanged. Turnover was $105.2 million. 

Retirement home developers were buoyed by Prime Minister Jacinda Ardern's decision to can a capital gains tax after failing to find common ground with her coalition and support partners. The prospect of a capital gains tax had been an unwelcome uncertainty for the sector, which in recent years had enjoyed the tailwind of an ageing demographic and a hot property market. 

Summerset led the index higher, up 3.9 percent at $5.90 on a volume of 464,000 shares, more than its 90-day average of 303,000. Metlifecare advanced 3.8 percent to $4.87 and Ryman Healthcare increased 1.3 percent to $11.85. 

Mark Lister, head of research at Craigs Investment Partners, said the gains partly reflected the reduced threat of a capital gains tax hitting the housing market.

"It's also a function of them being sold off pretty aggressively ever since Summerset had that quarterly update, which was weaker than expected, and then we've had a couple of months of quite soft housing reports," he said. 

NZX chief executive Mark Peterson welcomed the government's decision, saying it will give investors confidence in the share market and promote broad participation in local markets. The stock was unchanged at $1. 

Lister said weak inflation data probably had a greater impact on the wider stock market, with rising expectations that the Reserve Bank will cut the record-low 1.75 percent official cash rate at next month's review. Low interest rates typically spur demand for equities by encouraging investors to swap bonds for defensive companies that pay regular dividends. 

The NZX50's 4.83 percent average dividend yield is the third-highest major equity index tracked by Refinitiv across Asia Pacific, behind Australia's S&P/ASX 200 and Pakistan's Karachi 100. Utilities and property firms are strongly represented in the local index. 

Precinct Properties New Zealand was the most traded stock on a volume of 2.6 million shares, more than twice it 894,000 three monthly average. It was unchanged at $1.59. 

Spark New Zealand rose 1.1 percent to $3.69 on a volume of 1.7 million shares, well short of its 5.9 million average. Contact Energy rose 0.9 percent to $6.80 on a volume of 1.3 million shares, Meridian Energy was up 0.4 percent at $4.055 on 1.2 million shares, and Genesis Energy increased 1.9 percent to $3.16 on one million shares, more than twice its average. 

The prospect of low interest rates often benefits exporters if it dents the currency, such as today's decline in the kiwi dollar. Global cinema software analytics firm Vista Group International rose 3 percent to a record $5.09, fishing company Sanford rose 1.6 percent to $6.96 and Pushpay Holdings rose 1.6 percent to $3.80. 

A2 Milk Co hit an all-time high $16.04, and ended the day at $16, up 1.5 percent. Supplier Synlait Milk fell 1.2 percent to $10.50, while Fonterra Shareholders' Fund units rose 1.4 percent to $4.32. Fonterra shares, which trade in a closed market, were up 0.9 percent at $4.30. 

Trade Me was unchanged at $6.44, with 881,000 shares traded, ahead of its upcoming delisting. Shareholders voted to back a $6.45 per share takeover, which was ratified by the High Court yesterday. 

Aged care operator Oceania Healthcare will join the NZX50 on May 3. It rose 2.9 percent to $1.05 on a volume of 375,000, less than its 614,000 three-monthly average. 

Restaurant Brands New Zealand fell 3.4 percent to $8.36, adding to yesterday's decline when the fast-food operator reported a small increase in annual earnings and said it would retain cash for its major capital spending programme rather than pay a final dividend. 

Outside the benchmark index, travel software developer Serko climbed 6.9 percent to $3.55, a record close. It's gained 14 percent since April 10. 

Moa Group was unchanged at 40 cents after announcing a new executive line-up since buying Savor Group. 


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