MARKET CLOSE: NZ shares rise in Asian rally; Xero, Spark, Summerset bounce
By Suze Metherell
Sept. 9 (BusinessDesk) - New Zealand shares rose in a global rally as investors shrugged off worries about China. Spark New Zealand, Summerset Holdings and Fletcher Building advanced as tomorrow's likely rate cut by the Reserve Bank of New Zealand saw traders buy dividend-paying stocks.
The S&P/NZX 50 Index advanced 61.12 points, or 1.1 percent, to 5671.43. Within the index, 30 stocks rose, 14 fell and six were unchanged. Turnover was strong at $199 million.
Overnight markets on both sides of the Atlantic moved higher, triggered in part by a late surge in Chinese equities, amid optimism China’s government will act to support its flagging economy. Today, Asian markets followed suit, with Japan's Nikkei 225 index surging 5.8 percent in afternoon trading. Australia's S&P/ASX 200 Index climbed 1.7 percent, while China's Shanghai Composite Index continued its rebound up 1.7 percent.
The dual-listed Australian banks also gained. Westpac Banking Corp led the benchmark higher, up 4.5 percent to $34.92. Australian New Zealand Banking Group rose 4.4 percent to $31.41
Xero, the cloud-based accounting software firm, climbed 2.4 percent to $14.20, as a 'risk on' attitude boosted the stock higher. Fellow momentum stock, Pacific Edge, the biotech firm, climbed 3.2 percent to 48 cents, rebounding from a two year low.
"There were very positive leads from overseas and that's followed on and carrying on today," said James Smalley, director at Hamilton Hindin Greene. "It's a risk on day for the market and certainly does appear there is a bit of institutional buying with the volumes up. A lot of guys have been sitting on the sidelines with a bit of cash, and now they're thinking it's the time to come in and grab a few bargains."
RBNZ governor Graeme Wheeler is expected to cut the official cash rate by a quarter point to 2.75 percent tomorrow, according to all 11 economists in a Reuters survey. The prospect of lower rates has drawn investors to equities, and underpinned the local bourse despite offshore volatility, including concerns in recent weeks that China's economic growth is cooling.
Telecommunications service provider Spark climbed 0.6 percent to $3.36. Fletcher Building, the construction and building supplies company, advanced 3.5 percent to $7.17. Summerset Holdings, the retirement village operator, rose 3.5 percent to $3.88. Contact Energy gained 1.4 percent to $5.09.
"We will be looking at falling interest rates and with our very high income paying market, that will be attractive to domestic investors," Smalley said.
Sky Network Television rebounded 1.9 percent to $4.75 after the dominant pay-tv provider declined 21 percent over the past month.
"It gave up five years of share price appreciation in the space of two weeks, so a little bit of a relief rally for them," Smalley said.
Diligent Corp advanced 1.8 percent to $5.04 after the governance software developer appointed Michael Stanton permanent chief financial officer.
Air New Zealand, the national carrier, was the worst performer on the benchmark index, dropping 4.7 percent to $2.41.