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MARKET CLOSE: NZ shares rise, health stocks Metlifecare, Ebos, Orion gain

Wednesday 30th March 2016

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New Zealand shares hit a fresh record as health stocks Metlifecare, Ebos Group and Orion Health Group led the index higher.

The S&P/NZX 50 Index rose 37.8 points, or 0.6 percent, to 6,714.16. Within the index, 33 stocks rose, 10 fell and seven were unchanged. Turnover was $143.3 million. 

Metlifecare led the index, rising 4.4 percent to $5.17, a price not seen since February 2008 while Ebos Group gained 3.3 percent to $17.36, an all-time high.

"That healthcare and aged care sector just keeps on grinding on - people just keep getting older," said James Smalley, director at Hamilton Hindin Greene.

Orion Health Group grew 4.2 percent to $3.25. The shares jumped by as much as 6.4 percent on intraday trading after the Auckland-based medical software provider said it had signed a deal with a major healthcare insurer in the United States which will see its Amadeus platform rolled out to its 3 million-strong membership base. Shares of the unprofitable company have declined 43 percent since listing in November 2014 at $5.70 as Orion chases sales growth in lieu of profits.

"Long-suffering investors from the IPO are starting to see a little bit of the company realised, but there's still a long way to go before you get to break even on that one," Smalley said. "Today's gain is admittedly on light volumes, but it's certainly encouraging to see them bouncing off their lows."

Steel & Tube Holdings advanced 2.8 percent to $2.22, Warehouse Group rose 2.1 percent to $2.88, and Spark New Zealand gained 2 percent to $3.61. 

Air New Zealand edged up 0.4 percent to $2.86. The airline has hired investment bankers to look at a sale of its 26 percent stake in Virgin Australia, less than a fortnight after committing to a one-year A$131.2 million loan to the airline. Virgin's shares were placed in a trading halt before the announcement but dropped 3 percent in the afternoon. 

"They obviously felt whatever return they were getting from Virgin did not justify the capital investment, and that having a strategic alliance is more appropriate than having a stake in the business itself," Smalley said. "It's interesting they've come out with that announcement, normally you'd find out after the fact, and it's had an impact on Virgin, but a minimal impact on Air New Zealand. It's a strategic announcement, albeit one which is not big, so that's probably why the market has taken it in its stride."

Chorus was unchanged at $3.99 and has gained 2.1 percent so far this year. It plans to raise as much as $400 million through a five-year bond issue to help repay $1.67 billion of bank debt, joining a growing number of companies refinancing through the listed debt market . No indicative price was set, but the five-year swap rate was recently at 2.53 percent, near a record-low.

Contact Energy was the biggest loser, dropping 1.4 percent to $4.97, while Australia and New Zealand Banking Group continued the decline it began last week, down 1.3 percent to $25.68. 

"Contact is one which has been pretty well bid over the past while, there just seems to be a bit of profit taking on the downside," Smalley said.

Meridian Energy lost 0.9 percent, or 2 cents, to $2.57. It gave up rights to a dividend of 5.1 cents today, along with a special dividend of 2.44 cents. 

Outside the main bourse, Intueri Education Group fell 11.8 percent to 41 cents. Its financial statements have been tagged by its auditor over the company's ability to continue as a going concern.

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