MARKET CLOSE: NZ shares jump as RBNZ signals low rates for longer, Xero climbs on earnings

New Zealand shares pushed higher after the central bank held interest rates at a record low and unexpectedly kept its forecast rate track unchanged, stoking demand for dividend-paying stocks including property firms and power companies. Xero led gains after it crept closer to profitability. 

The S&P/NZX 50 added 66 points or 0.9  percent to 7,489.710.  Within the index, 38 stocks rose, four were unchanged and eight fell. Turnover was $180 million. 

New Zealand's share market outperformed most of Asia, with Hong Kong's Hang Seng up 0.3 percent and Australia's S&P/ASX 200 index flat in afternoon trading. High-dividend paying shares fared well after the Reserve Bank kept its view that interest rates won't move until 2019, maintaining the attraction of high yielding stocks, such as electricity generator-retailers. Genesis Energy added 2.7 percent to $2.27, Contact Energy was up 1 percent at $5.26.

"It was a strong day on the local market after the Reserve Bank kept rates unchanged. That's given heart to this market that just does not want to lie down," said Hamilton Hindin Greene Broker Grant Williamson. 

Property companies with steady dividends also fared well. Investore Property rose 1.5 percent to $1.33, Precinct Properties gained 0.8 percent to $1.21 and Vital Healthcare Property Trust increased 2.5 percent to $2.275.  Vital Healthcare said it has entered a conditional agreement with Acurity Health Group to become its long-term real estate capital partner. Separately, in its third-quarter update, Vital said profit attributable to unit holders of the trust was $83.45 million in the nine months to March 31, up from $69.35 million in the prior period.

Fisher & Paykel Healthcare added 2.3 percent to $10.51, benefiting from a tumble in the New Zealand dollar in the wake of the central bank's announcement. 

Xero led the benchmark index higher, rising 5.3 percent to $23 after the company said its net loss was $69.1 million, narrower than the $82.5 million reported in the prior period.  Chief executive Rod Drury didn't specify when the company might report a maiden profit but did note the company was ebitda-positive in the second half of the year, excluding share-based payments, and the operating cash flow also moved into positive territory. "You can see where we are making progress on all those things," he said. 

Z Energy added 0.8 percent to $7.89 after it more than tripled its annual profit after acquiring Chevron New Zealand's Caltex and Challenge! brands. Profit jumped to $243 million, or 61 cents per share, in the 12 months ended March 31, from $64 million, or 16 cents, the year earlier, it said. 

A2 Milk also helping bolster the index, adding 3.5 percent to $3.80, as investors continue to be cheered about its prospects in China, said Williamson. "It's in a major uptrend," he said.  

In the other direction, the biggest loser was Sky Network Television, which shed 1.9 percent to $3.66. The stock has struggled to gain any traction since the Commerce Commission rejected a tie-up between the pay-TV operator and telecommunications group Vodafone New Zealand

Some profit taking in Heartland Bank weighed on the index as it ended down 1.7 percent at $1.78. The stock rose sharply earlier in the week on news that its  Australian-owned banks faced new deposit levies across the Tasman. The dual-listed Australian banks rallied somewhat after chief executives of the 'big four' banks hinted that costs from the recently announced federal tax could be passed on to customers. Australia & New Zealand Banking Group rose 1.3 percent to $31.58 while Westpac Banking Corp added 0.8 percent to $35.07.

Tilt Renewables, which operates wind and solar generation facilities, ended flat at $2.14 after reporting its first result since its demerger from Trustpower, which was completed on Oct. 31, 2016. The company reported a 44 percent slide in net profit to A$16.4 million, driven lower by higher depreciation and higher income tax expenses following the demerger. Trustpower added 1.4 percent to $4.97. 

(BusinessDesk)