MARKET CLOSE: NZ shares rise as Fletcher Building extends gains on quake; Tower drops

Tuesday 15th November 2016

New Zealand shares advanced for a second day, with Fletcher Building extending its gain as fallout from Monday morning's 7.5 magnitude Kaikoura earthquake continues. Insurer Tower posted the biggest decline for another day.

The S&P/NZX 50 Index rose 32.66 points, or 0.5 percent, to 6,770.42. Within the index, 27 stocks rose, 14 fell and 10 were unchanged. Turnover was $159.8 million.

This week's quake is expected to provide more work for construction companies, though insurers will face a jump in claims and tourism operators may see a decline in numbers if the disaster puts off international visitors. Fletcher Building gained 2.5 percent to $10.79, while outside the benchmark index Tourism Holdings shed 1.6 percent to $3.15.

"There's a continuation of yesterday's moves really, companies like Fletcher Building are firming up again on the prospect of more infrastructure work to come, and Tourism Holdings is down again on a perception of a fall back in tourism," said Daniel Metcalfe, senior investment adviser at OMF.

Tegel Group led the index higher, up 3.5 percent to $1.49, while New Zealand Refining Co gained 3.3 percent to $2.48 and Genesis Energy advanced 2.4 percent to $1.89. New Zealand shares were sold off through October as the prospect of rising US interest rates detracted from the strong dividend yields on offer in the local market.

"I don't think interest rates are going to move nearly as quickly as people are fearful of at the moment, so the quite sizeable pullback in the market we've had over the last couple of months does bring some good opportunities for domestic investors," Metcalfe said. "The sell-off has been a bit too aggressive and there are opportunities because these companies are not going anywhere. I think the underlying strength of the market will continue."

Fisher and Paykel Healthcare rose 0.7 percent to $9.22, and has gained 7.2 percent since Donald Trump was elected US president.

"It's clearly benefiting from the Trump presidency, healthcare companies will generally do well under Trump," Metcalfe said. "He promised to deregulate banking and healthcare to make it easier to get drugs to market, which is positive for those companies that have a lot of sales in the US."

Tower was the worst performer on the local index for the second day, down 3.2 percent to 76.5 cents. The insurer said the cost of the earthquake in the upper South Island is limited by its reinsurance programme and can only lower its profit by a maximum $7.2 million.

Warehouse Group dropped 1.7 percent to $2.95 and Xero fell 1.1 percent to $17.50.

Outside the NZX50, Hellaby Holdings dropped 0.6 percent to $3.29. The Takeovers Panel says it won't accede to a request from Bapcor Finance to convene a meeting to look into alleged breaches of the Takeovers Code by Hellaby and its adviser Grant Samuel in urging shareholders to reject a takeover offer from the ASX-listed company.

Turners gained 2.5 percent to $3.23. The financial services firm, formerly known as Dorchester Pacific, has strengthened its ties with Motor Trade Finance by funding a non-recourse loan product that will allow MTF’s franchisees and dealers to sell vehicles to people with a higher credit risk.

BusinessDesk.co.nz

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