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MARKET CLOSE: NZX50 hits record as yield stocks remain in vogue

Friday 19th July 2019

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(July 18, 5:54PM) New Zealand shares outperformed Asia as companies offering reliable dividends helped lift the benchmark index to a record. Meridian Energy and Z Energy led the market higher. 

The S&P/NZX 50 Index rose 86.29 points, or 0.8 percent, to 10,741.09, an all-time high. Within the index, 32 stocks rose, 11 fell, and seven were unchanged. Turnover was $110.0 million. 

The NZX50 was the best performer across the 22 Asian equity indices tracked by Refinitiv and one of just four that was in positive territory. On average, it has the third-highest dividend yield at 4.54 percent, with a high number of infrastructure, property and utilities companies. It has gained 22 percent so far this year, pipped only by China's Shanghai Shenzhen CSI 300 index. 

"The yields on a lot of those companies have dropped as the share prices have risen, but people are still attracted to those consistent dividends," said Grant Davies, an investment advisor at Hamilton Hindin Greene. 

Meridian led the market higher, up 2.9 percent at $4.90 on a volume of 1.6 million shares, more than its 90-day average of 1.4 million. Z Energy rose 2.1 percent to $6.35 and Auckland International Airport increased 2 percent to $9.66. 

Mercury NZ advanced 1.1 percent to $4.63 after saying it relied on peaking capacity of its Waikato hydro generation in the June quarter, in a period when low lake inflows sapped production. Trustpower was unchanged at $7.27, Contact Energy rose 1.5 percent to $7.89 and Genesis Energy was up 0.9 percent at $3.48. 

Spark New Zealand increased 1.6 percent to $3.94 after welcoming the Commerce Commission's confirmation that it will deregulate the telecommunications company's resale copper voice services. The move was signalled in a draft decision earlier this year. The stock traded on 1.6 million shares, well down on its 4.2 million average. 

Network operator Chorus fell 1.1 percent to $5.48 on 896,000 shares, more than its 494,000 average. 

Kiwi Property Group was the most traded stock on a volume of about 2 million shares. It increased by 0.3 percent to $1.605. Fletcher Building fell 1.6 percent to $4.91 on a volume of almost 2 million shares, more than twice its 973,000 average. 

Of other stocks trading on volumes of more than a million shares, Precinct Properties New Zealand increased 0.3 percent to $1.775, Air New Zealand was up 0.9 percent at $2.775, and Goodman Property Trust advanced 0.8 percent to $2.015. 

Fonterra Shareholders' Fund units reported the biggest decline, down 2 percent at $3.85 with just 21,000 units changing hands, down on its 192,000 average. Fonterra Cooperative Group's farmer-owned shares fell 1.8 percent to $3.86. The dairy exporter today said it will accelerate its sustainability strategy by calling an immediate halt to installing new coal boilers or increasing capacity to burn coal. 

Synlait Milk rose 2 percent to $9.64 and A2 Milk Co was up 0.5 percent at $16.79. 

Dual-listed lenders Australia & New Zealand Banking Group and Westpac Banking Corp were both weaker after Fitch Ratings downgraded the outlooks for both banks' credit ratings. ANZ was down 1 percent at $28.20 and Westpac fell 0.7 percent to $28.82. AMP fell 1.1 percent to $1.85, extending its decline this week since it said the A$3.3 billion sale of its life insurance unit was unlikely to go ahead due to Reserve Bank of New Zealand criteria for the transaction. 

Outside the benchmark index, Asset Plus was unchanged at 64 cents after announcing the $29.1 million sale of a property in Hastings. Augusta Capital, which manages the real estate investor, was also unchanged, at $1.35. 

Mercury NZ's capital bonds paying annual interest of 3.6 percent were the most traded debt security on a volume of 610,000. The yield was unchanged at 3.17 percent 


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