MARKET CLOSE: NZ shares soar on election result, led by energy companies
By Suze Metherell
Sept. 22 (BusinessDesk) - New Zealand shares jumped, led by MightyRiverPower, after the National Party's convincing election victory on the weekend wiped out any regulatory fears for the power companies. Meridian Energy, Genesis Energy and Contact Energy paced gains.
The NZX 50 Index advanced 54.947 points, or 1.1 percent, to 5236.292. Within the index, 27 stocks rose, 13 fell and 10 were unchanged. Turnover was $144.2 million.
During the day, benchmark index climbed as much as 74.926 points, or 1.5 pecent, after Saturday's general election delivered the incumbent National Party a third term and the ability to govern alone. The partially privatised generator-retailers rose to records after the election win shut down the threat of regulation, which had been a cornerstone policy for opposition parties in trying to drag down power prices for consumers.
MightyRiverPower climbed 7.5 percent to $2.59, the highest it's closed at since shortly after its listing in May last year. Meridian advanced 4.8 percent to a record close of $1.52. Genesis increased 1.6 percent to $1.95, paring its earlier gain when it rose as high as $2.08. Contact Energy jumped 4.5 percent to $5.85, TrustPower gained 2.9 percent to $7.40, and infrastructure investor Infratil climbed 4.1 percent to $2.775.
"The market is buoyant and led by the power companies, which is not a surprise, given the regulatory risk declined with the National party coming into power again," said Shane Solly, director at Harbour Asset Management. The return of the National government means a" a consistent framework and more of the same" giving the market certainty.
Air New Zealand, the national carrier sold down by the government in its asset sale programme, rose 1.8 percent to $1.945.
Other companies facing regulatory threat paced gains, with telecommunications network operator Chorus advanced 1.1 percent to $1.77, as it faces a protracted dispute with the Commerce Commission over the pricing of its regulated copper lines network, while casino operator SkyCity Entertainment Group, the beneficiary of a deal with the National-led government to build a convention centre in Auckland, rose 0.8 percent to $3.70.
Steel & Tube rose 3.5 percent to $2.95. Fletcher Building, New Zealand's largest listed company, advanced 2.6 percent to $9.05.
"Interestingly we're seeing the likes of Steel & Tube and Fletcher Building up as well," indicating National's win was seen as a positive for the broader market, Solly said.
Spark New Zealand, formerly Telecom Corp, rose 0.5 percent to $3.015.
Kathmandu Holdings rose 1.9 percent to $3.15, ahead of tomorrow's annual earnings announcement, where it's expected to report underlying earnings of between $62.5 million and $65.5 million, compared to $63.4 million a year earlier.
Outside the benchmark index, Synlait Milk, which twice cut its earnings forecast, rose 0.6 percent to $3.32. Today the dairy company posted earnings growth that met revised guidance and said it plans to take a 25 percent stake Sichuan New Hope Nutritional Foods Co to gain a direct interest in a Chinese infant formula brand. Profit rose 70 percent to $19.6 million in the 12 months ended July 31, from $11.5 million a year earlier, the Rakaia-based company said in a statement.
Pumpkin Patch, the childrenswear chain trying to revive falling sales in a changing retail environment, advanced 2.4 percent to 42 cents as it continues to refresh its board, with chair Jane Freeman announcing her departure. Peter Schuyt, who has been an independent non-executive director since 2012, will take over from Freeman at the start of next month, while former Warehouse Group executive Luke Bunt will join the Pumpkin Patch board.
Shares of SLI Systems rose 4.8 percent to $1.32. The Christchurch-based online search engine developer said some of its initial shareholders may be selling shares after about two-thirds of the company's issued stock came out of escrow.