MARKET CLOSE: NZX 50 closes above 6,000 for first time, led by F&P; Spark, MRP gain

Tuesday 27th October 2015

The S&P/NZX 50 Index closed above 6,000 for the first time as shares were led higher by Fisher & Paykel Healthcare on optimism it will be among beneficiaries of a weaker kiwi dollar. MightyRiverPower, Meridian Energy and Spark New Zealand gained on investor demand for income-paying investments.

The benchmark index rose 30.35 points, or 0.5 percent, to a record close of 6,001.02. Within the index, 24 stocks rose, 17 fell and nine were unchanged. Turnover was $232 million.

F&P Healthcare, the breathing apparatus manufacturer and exporter which makes much of its revenue in US dollars, led the benchmark index higher, advancing 2.9 percent to a record of $7.91. The New Zealand dollar may finish 2015 at the lowest year-end level in seven years and be at a similar place at the end of next year, according to the latest BusinessDesk survey. Concerns about China's growth, the US Federal Reserve hiking rates and the impact the El Nino weather pattern will have on local agriculture are all weighing on the dollar.

"That stock has done marvelously well," said Grant Williamson, director at Hamilton Hindin Greene. "A new record high for the stock and the outlook is very positive, providing the currency stays down, so investors are pretty bullish on the prospects for Fisher & Paykel Healthcare."

The Reserve Bank may keep the official cash rate unchanged at 2.75 percent this week to avoid inflaming Auckland's housing market and to keep some capacity up its sleeve should global growth stumble. Traders to expect interest rates to be 2.5 percent by the end of the year, which is supportive for dividend paying equities, as investors look for return on their investments.

Utility companies, held for their reliable dividend stream, advanced. MRP climbed 0.7 percent to $2.78. Meridian gained 0.2 percent to $2.26. Spark, the telecommunications provider, rose 0.3 percent to $3.34.

"We're on day number 12 higher today," said Williamson. "Buyers are still really underpinning this market. A continuation of the low interest rates are still seeing investors move money from the banks into high-yielding investments. I think with the economic outlook, investors seem to be looking on the rosier side of things and confidence seems to be building all the time, both for the economy and the share market."

Fletcher Building advanced 0.8 percent to $7.45. Fletcher's construction unit has won the $477 million contract to build a convention centre, five-star hotel and associated infrastructure for SkyCity Entertainment Group in Auckland that the casino and hotel company agreed to with the government in exchange for gaming concessions and a licence extension. SkyCity was unchanged at $3.94.

Companies are also holding their annual shareholder meetings. Ebos Group, the animal and healthcare company, fell 0.5 percent to $13.90 after it told shareholders it expects annual earnings to again grow at a "double digit" rate, saying it has recorded a "positive start" in the first quarter.

Chorus rose 0.2 percent to $2.88 after chairman Patrick Strange told shareholders he is "cautiously optimistic" a new regulatory regime from 2020 will deliver more certainty for investors in the telecommunications sector.

Metlifecare rose 0.5 percent to $4.46 after telling shareholders it decided not to proceed with the proposed acquisition of Manukau Golf Course after an extensive due diligence process.

Warehouse Group was unchanged at $2.71 after New Zealand's largest listed retailer appointed Nick Grayston as its new chief executive, replacing Mark Powell.

Outside the benchmark index, Wynyard Group advanced 1.3 percent to $1.582. The security software firm inked a $2.5 million contract to provide security information and risk management services for a large European national infrastructure company which it didn't identify.

BusinessDesk.co.nz

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