MARKET CLOSE: NZ shares rise, snapping six-day losing streak, led by NZ Refining, Xero and SkyCity

Friday 16th September 2016

New Zealand shares rose, snapping a six-session streak of declines, led by New Zealand Refining Co, Xero and SkyCity Entertainment Group.

The S&P/NZX 50 Index gained 54.28 points, or 0.8 percent, to 7,250.52. Within the index, 32 stocks rose, 12 fell and six were unchanged. Turnover was $170.3 million.

The local index is down 2.9 percent this week, starting the week on a sour note when it fell more than it did after the Brexit vote as investors dumped stocks on Wall Street on growing expectations the Federal Reserve would resume hiking interest rates.

"We're just having a bit of a bounce after the weakness we've experienced this week," Grant Williamson, director at Hamilton Hindin Greene, said. "It's probably been one of the worst weeks we've experienced in quite some time, it's a pretty big move down for the local market after having such a good period.

"We're starting to see investors pay more attention to overseas markets, particularly the US, and the talk of the Fed doing something with interest rates before the end of the year - I think investors are going to keep a pretty close eye on that scenario for the next wee while."

Global interest rates near zero and quantitative easing programmes have attracted investors to New Zealand stocks, which pay relatively high dividends on blue-chip stocks. If US interest rates start rising the yield of NZX-listed firms would start to lose its allure, and investors are watching for signs on when the Fed might move. The US central bank's next policy review is Sept. 20-21 in Washington.

Williamson said today's bounce could also be from money paid to investors from the Nuplex Industries acquisition by Allnex Belgium SA being recycled into other companies.

"We've probably only seen a fraction of it come into the market so far, so over the next few weeks we might see some pretty good buy-in in some of our stocks."

NZ Refining was the best performer, up 4 percent to $2.35. The country's only oil refinery put out its monthly throughput and margin report yesterday for the July/August period. It had a gross refinery margin of US$6.20 per barrel, at the top end of its historical margin range, and throughput of 6.8 million barrels.

"Expectations weren't particularly high, but they came in a bit better than expected and that's seen a recovery in that share price since the release of that," Williamson said. "It's still relatively depressed from where it was a few months ago. We're still down a good dollar on where we were at the start of the year."

Xero advanced 3 percent to $19.99, while SkyCity lifted 2.5 percent to $4.58.

Genesis Energy rose 1.8 percent to $2.25, Meridian Energy gained 1.8 percent to $2.81, and Mercury New Zealand advanced 1.7 percent to $2.97.

"The electricity stocks are coming in for a nice bounce today, but they're still lower than they were only a couple of weeks ago," Williamson said. "Earlier in the week it was profit taking, now we're starting to see a bit of bargain hunting coming back into the marketplace. It was like income investors had disappeared for a few days, but they seem to be back in the market now."

Stride Property was the worst performer, down 3 percent to $1.95. Kiwi Property Group dropped 1.7 percent to $1.465 and Property for Industry fell 1.2 percent to $1.64.

Outside the main index, New Zealand Oil & Gas fell 4.7 percent to 51 cents. The unprofitable energy explorer launched a stand in the market to buy back as many as 40 million shares, creating a "liquidity event" for the thinly traded securities. The company has hired brokerage First NZ Capital to buy shares for as much as 55 cents apiece, a price it last reached in mid-2015. The biggest single day of trading in the past two years was on March 20 last year, when 8.95 million shares changed hands.

"It's something we don't see very often, but there was limited response, they didn't get the number they were looking for which is a little bit surprising given the share price now for New Zealand Oil & Gas is a 54 cent seller, and investors could've sold for 55 in the stand," Williamson said.

Rakon shares climbed 10 percent to 22 cents after activist shareholders rallied up enough support to dump market director Darren Robinson from the board at today's annual meeting as part of an effort to loosen the founding family's grip on the components maker.

BusinessDesk.co.nz

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