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MARKET CLOSE: NZ shares post 6.4% gain in June quarter as yield remains king

Monday 1st July 2019

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The benchmark S&P/NZX 50 Index rounded out a 6.4 percent gain in the June quarter, with demand for infrastructure, utilities, and property firms driving the benchmark to another record. 

The index today rose 69.88 points, or 0.7 percent, to 10,501.10, outperforming other Asian benchmarks as investors remain on edge over the outcome of the G-20 leaders' meeting in Osaka. Within the index, 35 stocks rose, nine fell, and six were unchanged. Turnover was $175.1 million. 

Companies paying reliable dividends led the market higher today, with Genesis Energy up 4.8 percent at $3.47 on a volume of 867,000 shares, more than its 90-day average of 596,000. Mercury NZ climbed 4 percent to $4.65 with 917,000 shares changing hands, compared to its usual volume of 670,000. Meridian Energy hit a record $5.03 before ending the day at $4.75, down 1 percent with almost 3 million shares changing hands. 

Peter McIntyre, an investment advisor at Craigs Investment Partners, said the Reserve Bank's bias to cutting interest rates even lower continues to support yield stocks, as investors seek out reliable cash flow. 

"Since then there's been good buying support, particularly for the yield plays and good infrastructure stocks," he said. 

New Zealand's benchmark index offers a dividend yield of 4.59 percent, the third-highest across Asian indices tracked by Refinitiv. That has underpinned demand for New Zealand shares at a time when investors are wary of protracted US-China trade tensions ahead of a meeting between presidents Donald Trump and Xi Jinping. 

Auckland International Airport has gained 21 percent in the June quarter. It rose 0.5 percent to $9.85 today on a volume of 2.6 million shares, about twice its average volume.

Growth stocks have also performed well in the quarter. Utilities software developer Gentrack Group rose 1.3 percent today to $6.20 on a light volume of 18,000 shares, and posted the best performance in the quarter, up 27 percent. Vista Group International ended the quarter up 23 percent after today's 0.6 percent increase to $6.05. 

Spark New Zealand was the most active stock on a volume of almost 5 million shares, still below its 90-day average. The telco rose 1.8 percent to $4 today. 

Fletcher Building fell 1.6 percent to $4.85 on a volume of 2.5 million shares, extending yesterday's decline as investors were spooked by a weaker outlook for its Australian division at this week's update. 

Kiwi Property Group fell 1.2 percent to $1.60 on a volume of 2.1 million shares, while Arvida Group rose 1.5 percent to $1.38 with 1.8 million shares changing hands. 

Of other stocks trading on volumes of more than a million shares, Chorus rose 1.1 percent to $5.70, Contact Energy advanced 1.7 percent to $8, and Argosy Property increased 0.4 percent to $1.38. 

Sky Network Television posted the day's biggest decline, down 1.7 percent at $1.18 on a volume of 754,000 shares, down on its 1.2 million average. 

McIntyre said investors weren't swayed by the pay-TV operator's plans to ditch its 'Puck' hardware in favour of its enhancing existing set-top box and streaming services. 

NZX was unchanged at $1.12. The upcoming initial public offering of Napier Port was confirmed earlier this week, and details of a preferential offer to staff, locals and iwi were announced today. The port will be the second listing this year after pre-revenue medicinal cannabis firm Cannasouth went public this month. Its shares dropped 5.7 percent to 33 cents today and are down from their 50 cent offer price. 

Chorus's 2021 bonds paying annual interest of 4.12 percent were the most traded debt security on a volume of 425,000. The notes closed at a yield of 2.59 percent, up 2 basis points. 

(BusinessDesk)



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