MARKET CLOSE: NZ shares rise in global rally, index led by Orion Health, Fisher & Paykel

Thursday 29th September 2016

New Zealand shares rose as global markets were encouraged by reports of a deal to ease the glut of crude oil. Orion Health Group, Fisher & Paykel Healthcare Corp and Auckland International Airport led the index.

The S&P/NZX50 Index gained 53 points, or 0.7 percent, to 7.343.45. Within the index, 24 stocks rose, 19 fell and seven were unchanged. Turnover was $110.5 million.

Markets across Asia advanced in the afternoon's trading, following Wall Street's positive lead after reports that the Organisation of the Petroleum Exporting Countries (OPEC) has agreed to reduce its oil output to 32.5 million barrels per day from the current production levels of around 33.24 million bpd. At 5pm New Zealand time, Australia's S&P/ASX200 was up 1 percent and Japan's Nikkei 225 had gained 1.6 percent.

"We have heard that rumour or talk before, there's nothing confirmed, but people are looking for signs of stability because if there's stability they get clarity for the commodity-related sector," Rickey Ward, New Zealand equity manager at JBWere, said. "Australia's market is up better than ours because they're more resource orientated. It adds a level of comfort when the commodities sector shows signs of stability. The market appears to be trading on a degree of comfort at the moment, because we're trading at a premium multiple domestically."

Orion Health Group led the index, up 4.5 percent to $3.50. It hit a six-month low of $3.29 yesterday, having fallen since its annual meeting last Thursday where chairman Andrew Ferrier told shareholders the strength of the kiwi is crimping revenue in local currency terms, meaning Orion will get less when sales are converted back into local currency.

Fisher & Paykel Healthcare Corp rose 2.9 percent to $10.10, Auckland International Airport gained 2.4 percent to $7.30, and Mercury New Zealand advanced 1.8 percent to $3.045. Ward said offshore-owned stocks were getting better attention today.

Genesis Energy was the worst performer, down 5.4 percent, or 12 cents, to $2.10. It gave up rights to an 8.2 cent final dividend today. Meridian Energy, which gave up rights to an 8.4 cent final dividend and a 2.44 cent special dividend, dropped 10.6 cents to $2.62.

Tower fell 2.1 percent to 94 cents. The insurer has shed half its value in the past 12 months on signs prolonged exposure to Canterbury earthquake claims has sapped its ability to pay dividends.

The shares climbed after the Australian Financial Review's Street Talk reported that the dual-listed company could be ripe for a takeover, possibly by Australia's Suncorp or Insurance Australia Group, but have since dropped back. The shares last traded at 94 cents in February 2004.

"It's still under pressure, it hovered up near a dollar when the AFR article came out saying people may be circling it as an investment - no-one's shown their hand, so people are starting to think they're not there, though I'm not sure that is the case," Ward said. "The share price is representing an element of frustration - it seems to be a company that just keeps having negative publicity. It increased provisions recently, there's litigation with a re-insurer - it just seems to be negative heading after negative heading, and it almost feels like people are giving up on it a little bit."

Outside the main index, Intueri Education Group rose 20 percent to 12 cents. The private education group's shares collapsed on Tuesday, slumping 80 percent in response to a warning about Australian government audits that threatened its viability. It's yet to recover to its pre-announcement price of 30 cents.

"It's continuing to recover prior losses, I read a note that people are investing in speculation so clearly the speculators are making money at the moment if that's the case," Ward said. "It's not surprising that the stock does re-rate, but whether that can be sustained is hard to tell. They've released a bit of information but it really is lacking visibility. People want to take a bit of a gamble, who knows where it will go."

Pumpkin Patch fell 8.9 percent to 8.2 cents. The indebted childrenswear retailer reported wider annual losses of $15.5 million for the 2016 year, from $9.1 million a year earlier, as sales dropped 11 percent.

BusinessDesk.co.nz

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