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MARKET CLOSE: NZ shares up, Mercury and Genesis gain

MARKET CLOSE: NZ shares up, Mercury and Genesis gain while Xero flat on Drury selling

By Sophie Boot

Nov. 17 (BusinessDesk) - New Zealand shares rose, led higher by gains from Mercury New Zealand and Genesis Energy, while Xero was flat on news its chief executive had sold 15 percent of his stake in the company.

The S&P/NZX50 Index gained 27.28 points, or 0.3 percent, to 8,061.98. Within the index, 24 stocks rose, 16 fell and 10 were unchanged. Turnover was $238 million.

Mercury New Zealand led the index higher, up 2.7 percent to $3.44, while Genesis Energy rose 2.3 percent to $2.42 and Summerset Group Holdings gained 1.7 percent to $4.88.

Xero was up 0.03 percent to $33.01. Chief executive and founder Rod Drury sold 3 million shares for $94.5 million, boosting the accounting software firm's liquidity as it prepares to shift to a sole ASX listing. Drury sold the shares in a placement to institutional and professional investors at $31.50 apiece, in his biggest transaction since taking the company public in 2007. He remains Xero's largest shareholder with 17.7 million shares, or about 13 percent.

"It was at a reasonable discount so the stock has traded down most of the day and had just climbed back up to where it closed over the day," said Matt Goodson, managing director at Salt Funds Management. "It's interesting that quite a chunk - 1.39 million of the 3 million shares - came into New Zealand. It is an interesting comment on the current controversy about Xero de-listing."

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"Just thinking that if you de-list from New Zealand that all the volume goes to Australia is wrong," Goodson said. "A lot of the volume is arbitrage activity between the two markets, which often depends on currency movements. I think they'll be shocked at how much trading activity dries up if and when they de-list."

Air New Zealand was the worst performer, down 2 percent to $3.115, with Spark New Zealand dropping 1.2 percent to $3.625.

Contact Energy fell 1.1 percent to $5.55 while Fisher & Paykel Healthcare gained 0.7 percent to $13.55.

Goodson said the key driver of Contact and Fisher & Paykel's share prices right now was the news that Contact will leave the MSCI Index, to be replaced by Fisher & Paykel. "It has been well-anticipated so it will be fascinating to see how the prices move on the day that happens," he said.

Precinct Properties New Zealand was unchanged at $1.31. The Auckland-based commercial property investor has raised $100 million in an oversubscribed seven-year bond, paying annual interest at the bottom end of its indicative margin.

Its $75 million offer was oversubscribed, with all $25 million of extra allocations taken up, it said in a statement. The price was set in a bookbuild at a margin of 1.5 percent above the seven-year swap rate, the bottom of an indicative range between 1.5-and-1.6 percent. The bonds will pay annual interest of 4.42 percent.

Outside the benchmark index, Wellington Drive Technologies dropped 17.7 percent to 14 cents. The company, which makes energy efficient motors for commercial refrigerators, widened its loss to $1.5 million in the third quarter and downgraded its 2017 earnings guidance on slower customer demand, though it's still forecasting its first net profit for the 2018 financial year.

(BusinessDesk

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