MARKET CLOSE: NZ shares rise as Reserve Bank hikes confirm growth
By Suze Metherell
June 12 (BusinessDesk) - New Zealand stocks rose after the Reserve Bank lifted the official cash rate, adding support to evidence for strong economic growth. Telecom, Air New Zealand and Trade Me Group paced the gain.
The NZX 50 Index advanced 15.961 points, or 0.3 percent, to 5195.11. Within the index, 21 stocks rose, 15 fell and 14 were unchanged. Turnover was $163.2 million.
Central bank governor Graeme Wheeler hiked the OCR a quarter-point to 3.25 percent, his third 25 basis points increase since he began his tightening cycle in March in a bid to fend off inflationary pressures. The currency gained as Wheeler showed no sign of slowing the pace of future rate hikes and deviating from his March projections.
"The big news today was the Reserve Bank," said Robert Garden, investment advisor for Craigs Investment Partners. "Ordinarily increasing interest rates aren't a positive for the market, but we're in early stages of the cycle and it does show proof that the economy is actually going steady and building momentum."
Telecom, the country's largest telecommunications provider rose 1.1 percent to $2.715. The stock is often seen as a proxy for the kiwi dollar as investors look for a place to park the currency, Garden said.
Air New Zealand, the national carrier, climbed 1.8 percent to $2.27. Trade Me Group, the online auction site, advanced 1.8 percent to $3.49. Xero, the cloud-based accounting software firm, gained 0.7 percent to $29.80.
New Zealand Oil & Gas led the benchmark index higher, up 5.2 percent to 81 cents.
Westpac Banking Corp was the worst performer of the day, down 2 percent to $37.50. Australian and New Zealand Banking Group fell 1.1 percent to $36.70.
Fletcher Building, New Zealand's largest listed company, dropped 0.4 percent to $9.08. Auckland International Airport fell 1.2 percent to $3.87.
Kathmandu Holdings, the outdoor good retailer, declined 0.6 percent to $3.45. Warehouse Group, New Zealand's largest listed retailer, slipped 0.9 percent to $3.36.
Outside the benchmark index, Wynyard Group rose 3.2 percent to $2.27 after the security software firm secured a three year contract with Australian gambling business Tatts Group.
Pyne Gould Corp fell 4.9 percent to 39 cents. Shares in the asset management firm controlled by South Island entrepreneur George Kerr were placed in a trading halt briefly after its Torchlight Fund No 1 LP was placed in receivership by a company associated with WorleyParsons chairman John Grill. PGG said the company was "an old shell" in dispute over residual payments on a loan.
Goodman Fielder was unchanged at 74 cents after the Australian food ingredients maker said it will spend $27 million to expand its Christchurch ultra heat treated milk plant, giving it additional capacity to meet increased demand for its Meadow Fresh brand in Asia.