MARKET CLOSE: Half billion dollar day for NZX as 7.5% of Sky TV changes hands

Friday 18th March 2016

New Zealand shares hit another record high and turnover topped $500 million as 7.5 percent of Sky Network Television changed hands and large parcels of several top 10 companies changed hands.

The S&P/NZX 50 Index rose 50.06 points, or 0.8 percent, to 6,623.51. Within the index, 31 stocks rose, 15 fell and four were unchanged. Turnover was $511 million.

"It looks like someone was doing a portfolio buy," said James Smalley, director at Hamilton Hindin Greene. "We were put in 'late adjust'. The announcement was made a few minutes before 5 o’clock. That’s typical when there’s either a big portfolio buy or sell, generally of a foreign investor."

Sky TV had 29.2 million shares sold, Meridian Energy had 34.8 million, Spark New Zealand saw 14.6 million shares traded and SkyCity Entertainment Group had 9.1 million.

"It’s been the relatively large market cap liquid stocks, so that would tie in," Smalley said. "If you are a foreign investor wanting exposure to our market you don’t really have any choice, you have to go into those type of stocks to get a meaningful stake.

"You might see buying during the week but a lot of it is done after market, generally on the last day of week and so that’s why you’ve seen those. For Sky TV as an example, you have had 13.6 million crossed after market so it’s pretty chunky."

While Sky TV ended the day 0.6 percent lower at $4.95, $145 million in the stock was sold, the biggest volume since March 2013 when News Limited sold its stake. The dual-listed stock was up 0.2 percent in afternoon trading on Australia's ASX 200.

The pay-television company has been presenting roadshows to Australian institutions this week, Smalley said, "and obviously investors over there have liked what they saw."

Peter McIntyre, investment adviser at Craigs Investment Partners, said the company had fundamentals going for it.

"Obviously local institutional retail investors are very aware of issues Sky TV has with online and offshore competition, but in saying that they've got scaleability in the New Zealand market, they've got great penetration with their customer base, their earnings are very strong and they've got very strong free cash flow, and that justifies them having such a positive yield," he said.

Mighty River Power led the index, up 4 percent to $2.89.

Kiwi Property Group grew 3.6 percent to $1.43. The property investor said its earnings for the year end March 31 are expected to include a significant property revaluation gain, up a net $175 to $180 million.

"That's adding fuel to the fire as investors look outside of term deposits to come into the equity market," McIntyre said. "The market's at an all-time high but interest rates are at an all-time low. We're starting to see investors rolling off term deposits. A portion of that's going to go into the equity market. Listed property vehicles and some of our key infrastructure stocks on the market are prime targets for investors because of their consistent cashflows."

A2 Milk Co advanced 2.7 percent to $1.91. It's gained this week after global dairy prices sank at the fortnightly auction, with lower milk prices meaning lower costs for the milk-buying companies.

Metlifecare rose 2.7 percent to $4.98, and Freightways increased 2.6 percent to $6.35

Air New Zealand gained 2.5 percent to $2.84.

The airline "is a pretty good quality company, and we've seen quality companies actually go stronger ex-dividend," McIntyre said. "From a valuation point of view, it would seem to be reasonably cheap."

Fletcher Building rose 1.2 percent to $7.69. The stock has gained 17 percent since announcing its first-half earnings in mid-February.

"It's been one that's been able to rally quite hard after initially being sold off at results time, it's been keenly bid for," McIntyre said. "Maybe analysts have decided that actually it's in better shape than what they first imagined."

New Zealand Refining Co dropped 2.2 percent to $3.17. Yesterday it reported disappointing throughput data for the first two months of the year.

Steel & Tube fell 1.3 percent to $2.26. The stock shed 3.4 percent yesterday when the Commerce Commission said it's investigating the building products company after its chief executive admitted selling "many thousands of sheets" of earthquake reinforcing mesh wrongly certified with an independent laboratory's logo. The company has described the error as an oversight.

BusinessDesk.co.nz

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