MARKET CLOSE: NZ stocks mixed as investors hunt yield, led by Meridian
By Suze Metherell
Aug. 7 (BusinessDesk) - New Zealand stocks were mixed as investors hunting yield kept a lid on international selling pressure. Meridian Energy led the benchmark index, paced by Telecom Corp and Tower.
The NZX 50 Index edged up 2.57 points, or 0.1 percent, to 5097.509. Within the index, 18 shares rose, 23 fell and nine were unchanged. Turnover was $125.5 million.
Asia-Pacific markets fell as escalating tensions between Ukraine and Russia spooked investors. Japan's Nikkei 225 Index dropped 0.4 percent in afternoon trading, while Australia's S&P/ASX 200 Index slipped 0.1 percent. The relatively high dividends on New Zealand stocks offset selling from international investors ahead of earnings season, which will be used to justify whether the 7.6 percent gain the benchmark index has made this year is warranted.
Stocks with high dividend yields paced the NZX 50 index higher. Meridian Energy, which offers a 8.9 percent dividend yield, climbed 2.5 percent to $1.25. Telecom, with a 5.5 percent dividend yield, rose 0.9 percent to $2.87. Tower, which has a dividend yield of 7.3 percent, advanced 1.7 percent to $1.82. ANZ Bank New Zealand offers 4.75 percent on an 18-month $10,000 term deposit.
"The only reason to sell something is if you think you can put it somewhere better, and generally if there is weakness in the market investors will think cash is better, but cash is still only paying 3 percent, so investors are saying 'I'm quite happy where I am'," said James Smalley, director at Hamilton Hindin Greene. "We are still in a relatively low yield environment, and a number of our companies are still paying dividends north of 7 percent. Investors are happy sitting where they are, collecting the income."
Diligent Board Members Services advanced 2.4 percent to $4.20, ahead of reporting its second quarter earnings tomorrow. Brian Henry, a venture capitalist and one of Diligent's founders, today admitted breaches of the Securities Markets Act by manipulating the company's shares in early 2010 at the Auckland High Court. He was fined $130,000.
Chorus, whose shares have halved in value from their 2012 peak, rose 0.3 percent to $1.76. The telecommunications network operator tasked with building the bulk of the nation's ultrafast broadband network is in dispute with the Commerce Commission over the proposed regulated cutting of the network operator’s pricing on its copper line services, while other telecommunications providers have laid claims Chorus is trying to dodge regulation with new service offerings.
"The pricing process grinds on - it is pretty much Chorus versus everyone else, all vested interests of course, dressed up as public good will," Smalley said. A substantial shareholder notice today showed Australian fund L1 Capital, known for its low-value but long-term plays, took a 5 percent stake, Smalley said.
Heartland New Zealand, the bank formed from the merger of Canterbury and Southern Cross building societies and Marac Finance, was unchanged at 94 cents after it said annual earnings soared 421 percent to $36 million in the year ended June 30, 2014 after one-off charges in the prior year washed through and as it improved profitability.
Fletcher Building, New Zealand's largest listed company, rose 1 percent to $8.95.
Outside the benchmark index, Turners and Growers was unchanged at $2.05 after the fruit marketer controlled by Germany's BayWa, reported a 39 percent drop in first-half earnings $10.2 million in the six months ended June 20, saying profitability had been hurt by a series of one-off events.
Sea Dragon rose 12 percent to 1.9 cents. The Nelson-based fish oils processor commissioned Edison International Research to compile an investor research report, which put fair value of 2.7 cents per share on the company and said the success of a newly signed contract with a Portuguese fishing vessel to catch sharks in the south-west Pacific Ocean is the most important risk to the company's plans.