MARKET CLOSE: NZ shares rise on a2 bounceback; Tower, Genesis attract investors

Friday 27th November 2015

New Zealand shares rose as a2 Milk, which had dipped from a record high this week, resumed its rally, and companies held for their relatively high yields, such as Tower and Genesis Energy, gained on speculation the Reserve Bank will cut interest rates next month.

The S&P/NZX 50 index rose 13.11 points, or 0.2 percent, to 6101. Within the index, 25 stocks rose, 16 fell and 9 were unchanged. Turnover was $157 million.

A2 Milk lead the market, rising 7.3 percent to $1.18. The stock, also listed on the ASX, has risen nearly 60 percent between November 9 and 24 to an all-time high of $1.27, buoyed by Australian media reports of infant formula shortages spurred by Chinese demand. Fellow Australian infant formula exporters Bellamy's and Blackmores have seen similar success.

"There was a bit of profit taking after a2's meteoric rise," said James Smalley, director at Hamilton Hindin Greene. "That profit taking has started to dry up, and you're seeing the stock start to move back up, with reasonable volumes."

Smalley said high-yielding stocks rose such as power companies, property investors and insurers as investors sought income ahead of a predicted Reserve Bank interest rate cut on Dec. 10. "The potential for another rates cut makes income-related stocks way more attractive," he said.

Tower, which rose 2.6 percent to $1.95, trades at a yield of 8.7 percent, and Genesis Energy, which rose 2.1 percent to $1.98, trades at a yield of 8.3 percent. Vital Healthcare Property Trust rose about 3 percent to $1.91. Goodman Property Trust rose 1.6 percent to $1.245.

Stride Property rose 2 percent to $2.09 after a fund related to the company bought two shopping malls from Scentre Group.

Fisher & Paykel Healthcare rose 1.5 percent to $8.14. The medical device maker increased first-half profit by 27 percent to a record $62 million and affirmed its expectation for full-year earnings.

Orion Health Group fell 2.8 percent to $3.50, after posting a wider first-half loss it said was in line with expectations on Wednesday.

Xero dropped 2.3 percent to $20.10, and SkyCity Entertainment Group shed 2.1 percent to $4.19.

Outside of the benchmark index, SeaDragon rose 18 percent to 1.3 cents. The fish oil processor, which has attracted health products maker Comvita as a cornerstone shareholder, widened its first-half loss on mounting interest costs associated with the company's newly built Omega-3 factory, which starts operating in coming days.

Moa Group rose 4 percent to 52 cents. The unprofitable craft beer brewer confirmed a smaller first-half loss as increased sales volumes helped widen its gross margin, and it slashed its spending on sales and marketing.

Scott Technology rose 0.7 percent to $1.41, after shareholders overwhelmingly backed a deal handing control of the robotics manufacturer to Brazilian meat processor JBS.

BusinessDesk.co.nz

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