MARKET CLOSE: NZX 50 breaks through 3700 for first time since February 2008
Sept. 7 (BusinessDesk) - New Zealand shares rose, pushing the NZX 50 Index above 3700 for the first time since February 2008 as offshore investors were drawn to the relatively high dividend yields and defensive nature of the nation’s listed companies.
Trade Me gained as it stock was welcomed into the S&P/ASX 300 Index.
The NZX 50 rose 28.64 points, or 0.8 percent, to 3722.18. Within the index, 31 stocks rose, 10 fell and nine were unchanged. Turnover was a higher-than-average $173.7 million.
Trade Me, the auction site that Fairfax Media sold down last year, rose 2.8 percent to $4.05. The company will join the ASX 300 at the close of trading on Sept. 21. Telecom, the biggest company on the exchange, rose 0.6 percent to $2.48. The stock has a dividend yield of 12 percent.
“There’s a reasonably steady flow of offshore money looking for relatively defensive investment opportunities,” said Craig Brown, senior investment analyst at One Path New Zealand. “Relatively speaking New Zealand stands out.”
Fletcher Building, the second-largest company on the exchange, rose 0.3 percent to $6.50. OceanaGold, operator of the Macraes gold field, rose 3.3 percent to $3.41.
Warehouse Group, the biggest retailer on the bourse, fell 1.7 percent to $2.85. Profit before one-time items was $65.2 million in the 12 months ended July 29, down from $76 million a year earlier, the Auckland-based company said in a statement. Sales rose 3.9 percent to $1.7 billion. That’s in line with the retailer’s May forecast of an adjusted net profit after tax of $62 million to $66 million.
The company expects to lift earnings on that basis in the current year as it embarks on a multi-year refit of its Red Shed stores.
“They are on a journey and they are just starting it,” One Path’s Brown said. The numbers don’t show the company is “going gangbusters” yet.
Air New Zealand, which is about 75 percent government owned and faces a tougher trans-Tasman market now that Emirates is partnering with Qantas Airways, rose 1.4 percent to $1.13, the highest since early August, with 7.6 million shares changing hands. That’s the biggest volume since April 2009.
“They were reasonably optimistic in their outlook,” Brown said. “It would appear some people have bought into that.”
Rakon was unchanged at 44 cents. The board of directors won’t get an individual fee increase until the company’s pretax earnings almost double to $25 million and managing director Brent Robinson has agreed to a pay freeze on the same terms, chairman Bryan Mogridge says. It is rated ‘outperform’ based on a Reuters survey of four analysts, with a price target of 66 cents.
PGG Wrightson, the nation’s biggest rural services company, rose 2.9 percent to 34 cents, leading the index lower. Kathmandu, the outdoor equipment chain, fell 2.2 percent to $1.75.