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MARKET CLOSE: NZX50 gains as investors chase yield

MARKET CLOSE: NZ stocks rise as investors chase yield; Wrightson, AMP, Pyne Gould lead gains

By Jason Krupp

Oct. 18 (BusinessDesk) – New Zealand stocks rose for the second time in three sessions, after the release of softer consumer inflation numbers spurred investors to chase high yielding equities. PGG Wrightson Ltd., AMP Ltd., and Pyne Gould Corp. lead gains on the main board.

The NZX 50 Index rose 6.5 points, or 0.2%, to 3,262.35. Within the index, 29 stocks rose, 14 fell and seven were unchanged. Turnover was $67.4 million.

New Zealand consumer prices rose 1.1% in the three months to Sept. 30, with rising vegetables costs underpinning the increase in food prices, according to Statistics New Zealand. However, annual inflation slowed to a six-year low at 1.5%, keeping pressure off the central bank to start hiking interest rates.

“The market held up extremely well, with a lot of investors chasing high yield stocks,” said Grant Williamson, a director at Hamilton Hindin Greene. “The economic data out today indicates that interest rates are going to be lower for a lot longer and people are looking to equities as an alternative to fixed income.”

Wrightson, the rural services company, rose 3.5% to 59 cents, pacing gainers of the NZX 50. AMP, the Australian wealth manager, rose 2.9% to $7.20, and Pyne Gould, the financial services company, rose 2.5% to 41 cents.

Williamson said Wrightson and Pyne Gould had underperformed during the September and October rally, and speculated that the stocks were playing “catch up”.

Among the other stocks in the spotlight among yield hunters, SkyCity Entertainment Group, the casino and hotel operator rose 1.4% to $2.92, Tower Ltd., the general insurer, rose 1.1% to $1.86, and Vector Ltd., the electricity lines and gas company, rose 0.9% to $2.32.

Delegat's Wine Estate Ltd., the listed winemaker and distributor, rose 6.7% to $1.75 after the company announced that it is has made a bid to purchase the 45% of Oyster Bay Marlborough Vineyards Ltd. it does not already own after receiving an approach from the independent directors.

Delegat’s offered $1.80 a share cash or one Delegat's Group Ltd share for every Oyster Bay share. Oyster Bay's shares were unchanged today at $1.60.

Telecom Corp., New Zealand’s biggest telephone company, was unchanged at $2.07.

Property stock led declines on the NZX, with the NZSX Property Group Index slipping 1.2% to 793.08.

“Property stocks have had quite a reasonable run up until now as investors chased yield,” Williamson said. “Now they’re focusing outside property trusts and looking at industrial and service companies instead.”

DNZ Property Fund, which recently joined the property group index, fell 2.5% to $1.19, Goodman Property Trust fell 2% to 97 cents, and Property for Industry, the commercial and industrial property investor, fell 1.7% to $1.16.

Vital Healthcare Property Trust, the investor in specialised medical clinics, fell 1.6% to $1.26, AMP NZ Office Trust, the prime office space investor, fell 1.3% to 76 cents, and Kiwi Income Property Trust, the retail and mall space investor, fell 1% to $1.03.

Tourism Holdings Ltd., the campervan rental company, expects to post a first-half loss of up to $1 million as the strong kiwi dollar saps demand from British tourists.

The company said New Zealand’s currency helped depress the number of U.K. visitors, which are down by about 5% from a year ago, and cut the hire period by some 10% as tourists reduce the length of their visit. THL held off from making a forecast when it released its annual report last month, saying October is traditionally a strong month for bookings. The shares fell 3.3% to 88 cents in trading today, turning around a 3.3% gain before the statement was released.

Fletcher Building Ltd., New Zealand’s biggest construction company, fell 0.8% to $8.28, Westpac Banking Corp., the Australian lender, fell 0.8 to $29.75, and New Zealand Oil & Gas Ltd., the energy exploration and production company, fell 0.8% to $1.33.

The BNZ-Business NZ Performance of Services Index showed the sector continued to grow last month, an early indication the economy is returning to growth after stalling in the middle of the year.

(BusinessDesk)

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