MARKET CLOSE: NZ stocks rise as investors chase yield

Monday 18th October 2010

New Zealand stocks rose for the second time in three sessions, after the release of softer consumer inflation numbers spurred investors to chase high yielding equities.

PGG Wrightson, AMP, and Pyne Gould lead gains on the main board.

The NZX 50 Index rose 6.5 points, or 0.2%, to 3,262.35. Within the index, 29 stocks rose, 14 fell and seven were unchanged. Turnover was $67.4 million.

New Zealand consumer prices rose 1.1% in the three months to September 30, with rising vegetables costs underpinning the increase in food prices, according to Statistics New Zealand. However, annual inflation slowed to a six-year low at 1.5%, keeping pressure off the central bank to start hiking interest rates.

“The market held up extremely well, with a lot of investors chasing high yield stocks,” said Grant Williamson, a director at Hamilton Hindin Greene. “The economic data out today indicates that interest rates are going to be lower for a lot longer and people are looking to equities as an alternative to fixed income.”

Wrightson (NZX: PGW ) rose 3.5% to 59 cents, pacing gainers of the NZX 50. AMP (NZX: AMP ) rose 2.9% to $7.20, and Pyne Gould (NZX: PGG ) rose 2.5% to 41 cents.

Williamson said Wrightson and Pyne Gould had underperformed during the September and October rally, and speculated that the stocks were playing “catch up”.

Among the other stocks in the spotlight among yield hunters, Sky City (NZX: SKC ) rose 1.4% to $2.92, Tower (NZX: TWR ) rose 1.1% to $1.86, and Vector (NZX: VCT ) rose 0.9% to $2.32.

Delegat's (NZX: DEL ) rose 6.7% to $1.75 after the company announced that it is has made a bid to purchase the 45% of Oyster Bay Marlborough Vineyards it does not already own after receiving an approach from the independent directors.

Delegat’s offered $1.80 a share cash or one Delegat's Group Ltd share for every Oyster Bay share. Oyster Bay's shares were unchanged today at $1.60.

Telecom (NZX: TEL ) was unchanged at $2.07.

Property stocks led declines on the NZX, with the NZSX Property Group Index slipping 1.2% to 793.08.

“Property stocks have had quite a reasonable run up until now as investors chased yield,” Williamson said. “Now they’re focusing outside property trusts and looking at industrial and service companies instead.”

DNZ Property Fund (NZX: DNZ ) fell 2.5% to $1.19, Goodman Property Trust (NZX: GPT ) fell 2% to 97 cents, and Property for Industry (NZX: PFI ) fell 1.7% to $1.16.

Vital Healthcare Property Trust, the investor in specialised medical clinics, fell 1.6% to $1.26, AMP NZ Office Trust (NZX: APT ) fell 1.3% to 76 cents, and Kiwi Income Property Trust (NZX: KIP ) fell 1% to $1.03.

Tourism Holdings (NZX: THL ) expects to post a first-half loss of up to $1 million as the strong kiwi dollar saps demand from British tourists.

The company said New Zealand’s currency helped depress the number of UK visitors, which are down by about 5% from a year ago, and cut the hire period by some 10% as tourists reduce the length of their visit. THL held off from making a forecast when it released its annual report last month, saying October is traditionally a strong month for bookings. The shares fell 3.3% to 88 cents in trading today, turning around a 3.3% gain before the statement was released.

Fletcher Building (NZX: FBU ) fell 0.8% to $8.28, Westpac fell 0.8 to $29.75, and New Zealand Oil & Gas (NZX: NZO ) fell 0.8% to $1.33.

Businesswire.co.nz

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