MARKET CLOSE: NZ shares rise on continued hunger for yield; SkyCity, Freightways up, Skellerup down

Tuesday 15th March 2016

New Zealand shares rose, marking the ninth consecutive record high for the benchmark index, as low interest rates underpinned demand for dividend yields. SkyCity Entertainment Group and Freightways gained while Skellerup and NZX dropped.

The S&P/NZX 50 Index rose 11 points, or 0.2 percent, to 6,577.83. Within the index, 20 stocks rose, 19 fell and 11 were unchanged. Turnover was $196 million.

The local bourse has now risen for twelve trading sessions in a row, more than regaining its losses from January and February when global turmoil dragged markets lower.

Much of the strength is coming from investors looking for returns as interest rates remain low said Grant Williamson, director at Hamilton Hindin Greene.

SkyCity led the index, rising 4.9 percent to $4.73. It dropped 3.8 percent yesterday, and is up 1.8 percent so far this year, having posted a 30 percent gain in first-half profit to $71 million in February.

"SkyCity's had a good day today though it lost a fair amount yesterday," Williamson said. "It's quite a volatile stock at the moment."

Freightways gained 3.4 percent to $6.38 while Genesis Energy grew 2.9 percent to $2.13.

Sky Network Television rose 1.4 percent to $5. The stock was the biggest gainer yesterday and is reportedly on a roadshow convincing Australasian investors of its value in the face of vastly increased competition in the sector.

Z Energy advanced 1.4 percent to $6.69 and Orion Health Group climbed 1.3 percent to $3.12.

NZX lost 2.9 percent, or 3 cents, to $1.01. The market operator today gave up rights to a 3 cents-per-share dividend, payable on March 30.

Skellerup Holdings shed 2.3 percent to $1.26. The stock's fallen 15 percent so far this year. Last month, the industrial rubber goods firm reported its first-half profit had fallen as weakness in its agricultural business offset earnings growth from its industrial unit. The company's exposure to the weakened dairy sector is another concern for investors.

Westpac Banking Corp fell 1.7 percent to $36.30, and Heartland Bank declined 1.6 percent to $1.22

Outside the main index, Scales Corp rose 6.8 percent to $2.67. China Resources Ng Fung has acquired 15.3 percent of Scales, which is New Zealand's biggest apple exporter, for about $55.9 million from Direct Capital Investments. The Hong Kong-based company today entered into an arrangement to buy the shares at $2.60 apiece.

"It will hopefully open further doors into the Chinese market," Williamson said. "Scales has been an absolute winner in recent times," with the stock up 4.1 percent for the year to date, and the business doubling annual profit in 2015.

Synlait Milk rose 2.8 percent to $2.90. The South Island-based dairy processor has added 28 milk suppliers in Canterbury, boosting the total to 201 to meet forecast growth in its value-added nutritional product business for the 2016/17 season following soaring infant formula sales from one of its key customers, A2 Milk Co, which dropped 2.2 percent to $1.82.

BusinessDesk.co.nz

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