MARKET CLOSE: NZX 50 rises to record led by Genesis on yield
MARKET CLOSE: NZX 50 rises to record led by Genesis on yield hunt
By Suze Metherell
March 6
(BusinessDesk) - New Zealand shares rose led by Genesis
Energy and paced by Spark New Zealand, as the international
hunt for income paying investment returned. Warehouse Group
fell after it cut its forecast for the annual dividend.
The NZX 50 Index rose 46.293 points, or 0.8 percent,
to a fresh record of 5903.065. Within the index, 30 stocks
rose, 10 fell and 10 were unchanged. Turnover was $156
million.
The relatively high dividend yield of the
local bourse has lured investors, in a globally low interest
rate environment. Utilities, property investors and
telecommunication companies rose. Genesis advanced 2.4
percent to $2.335. Spark, formerly Telecom Corp, gained 1.5
percent to $3.30. Contact Energy gained 1.2 percent to
$6.13. Precinct Properties New Zealand increased 0.8 percent
to $1.205.
"There is a huge yield trade globally,"
said Matthew Goodson, managing director at Salt Funds
Management. "The main impetus for the yield trade really has
been the collapse in bond yields, globally."
Warehouse
was the worst performer on the benchmark index today falling
4.1 percent to $2.79. New Zealand's largest listed retailer
lowered its forecasts for annual profit and dividends, while
posting a 19 percent drop in adjusted first-half profit to
$37.2 million, as its Red Sheds and Noel Leeming units
missed expectations. The retailer had promised to keep its
annual dividend payment at a minimum of 19 cents per share
as it transitioned to a lower payout rate over two years,
but today abandoned that policy, forecasting a 16cps
full-year dividend.
"The dividend was cut, and
certainly when they raised equity last year a wee bit was
made of the dividend they might be able to pay," Goodson
said. "It certainly gives a view of the board of Warehouse
as to their earnings outlook and the strength of their
balance sheet."
Meridian Energy rose 2.2 percent to
$2.07, rebounding from yesterday's 4.9 percent drop after an
international index unexpectedly excluded the
partially-privatised energy generator from among its
members, Goodson said. Fund managers who follow the index
must hold stocks that are included in it, and some try to
buy ahead of the announcement.
"The market has been
expecting them to enter the FTSE index, which is an index a
number of global funds track closely," Goodson said.
"Yesterday it was announced MightyRiver was going into the
index, but that Meridian isn't entering that index yet. What
you see happen is a lot of hedge funds, broking desks
etcetera try to frontline these index changes."
Conversely, MightyRiverPower rose 0.3 percent to
$3.44, extending yesterday's gains after being included in
the international index.
Air New Zealand rose 0.2 percent to $2.955. The national carrier will scrap its pre-selected travel insurance option after receiving a formal warning from the Commerce Commission, which is cracking down on businesses misleading consumers with 'opt out' additional products.
(BusinessDesk)