MARKET CLOSE: NZ shares up, A2 Milk and Auckland Airport rise

Tuesday 16th January 2018

New Zealand shares rose in light trading, led higher by A2 Milk Co on a rival's earnings upgrade and Auckland International Airport gaining.

The S&P/NZX50 Index gained 39.17 points, or 0.5 percent, to 8,250.54. Within the index, 22 stocks rose, 17 fell and 11 were unchanged. Turnover was $79.9 million.

A2 Milk Co led the index, up 3.8 percent to $8.

"It's really piggybacking off an earnings upgrade from Bellamy's overnight," said Matt Goodson, managing director at Salt Funds Management. "A lot of the reasons for the upgrade did appear to be Bellamy's specific, but it's broadly supportive that trading conditions for A2 continue to be solid."

ASX-listed Bellamy's, which like A2 produces infant formula, saw its shares up 23 percent to A$13.49 at 5pm New Zealand time after it upgraded its full year revenue growth guidance for its core business to 30-to-35 percent, from 15-to-20 percent.

Auckland International Airport gained 1.8 percent to $6.37. It will sell its quarter-stake in the Cairns and Mackay airports in North Queensland to its fellow investors for A$370 million, almost three times what it paid eight years ago.

"They have sold their investment in North Queensland Airports at a price that's stronger than expected, around about 10 cents per share value upside versus most analysts' estimates," Goodson said. "The market had been questioning Auckland Airport's balance sheet, it does have very large amounts of debt already ahead of significant planned capex, so this puts off any questions around that a little further into the future."

Mainfreight was the worst performer, down 1.7 percent to $24.78, with Fletcher Building dropping 1 percent to $7.62 and Arvida Group down 0.8 percent to $1.26.

"Property stocks are under pressure across Australasia," Goodson said. "Bond yields are rising from extremely low levels, that's starting to put a bit of pressure on more interest rate sensitive stocks - the pure yield plays and the very highly valued growth stocks. Those two groupings have been very strong performers through much of 2017, but in December and January they have been starting to see that change a bit."

NZX fell 0.9 percent to $1.12. The Wellington-based stock market operator released 70-odd submissions on proposed changes to stock market listing rules and, while most back simplifying the rules, they were divided on a proposal to incorporate differential requirements for equity issuers. NZX's preference is for a single equity market and set of rules, with varying standards for smaller equity issuers.

(BusinessDesk)

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