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MARKET CLOSE: NZ shares mixed

MARKET CLOSE: NZ shares mixed; yield stocks back in vogue, Air NZ gains

By Paul McBeth

Sept. 25 (BusinessDesk) - New Zealand shares outperformed the rest of Asia, edging higher as yield stocks such as Trustpower and Infratil were back in favour among investors. Air New Zealand rose as rival Jetstar signalled it will stop flying regional routes.

The S&P/NZX 50 Index increased 2.73 points, or 0.03 percent, to 10,861.44. Within the index, 17 stocks rose, 22 fell, and 11 were unchanged. Turnover was $110.6 million.

The New Zealand and Australian markets outperformed the rest of Asia after stocks on Wall Street were generally weaker as US President Donald Trump stoked fears about his ongoing trade war with China. On a separate front, the threat of Trump's impeachment also weighed on global equity markets.

"Over the last couple of weeks, we had seen quite a strong swing towards value-type stocks outperforming the pure yielders and particularly the growth momentum names," said Matt Goodson, managing director at Salt Funds Management. "That's started to change again in the last several days in the markets and is certainly evident across Australia and New Zealand today."

Trustpower led the market higher, up 3 percent at $8.25 on a typically small volume of 31,000 shares, though less than half its 90-day average of 71,000. Cornerstone shareholder Infratil was up 1.9 percent at $4.90, Port of Tauranga advanced 1.1 percent to $6.47 and Meridian Energy increased 1 percent to $5.30.

Air New Zealand rose 2.6 percent to $2.75 after Qantas Airways' Jetstar unit said it planned to withdraw from five unprofitable regional routes in November. The national carrier said it will investigate increasing capacity and keep prices low for those routes.

Air NZ also held its annual meeting, where shareholders approved a multi-billion-dollar purchase of 10 fuel-efficient aircraft in chief executive Chris Luxon's last AGM. The board signalled it will make an announcement on his replacement next month.

Goodson said the Jetstar exit was of marginal benefit to Air New Zealand, with regional routes often struggling to retain more than one carrier.

"Air New Zealand's great strength has been its dominance on those regional routes to feed into its national and international network," he said, adding that it was a bit surprising not to get more of an update on the CEO appointment.

Auckland International Airport increased 0.2 percent to $9.26.

Spark New Zealand was the most traded stock on a volume of 2.4 million shares, less than its 3.3 million average. It rose 1.2 percent to $4.545.

Vista Group International fell 0.3 percent to $3.79 on a volume of 2.4 million shares, more than five times its 428,000 average.

Pushpay Holdings fell 3 percent to $3.28 on a volume of 1.1 million shares, posting the day's biggest decline.

Of other stocks trading on volumes of more than a million shares, Fletcher Building was unchanged at $5.10, Goodman Property Trust increased 0.5 percent to $2.18, Kiwi Property Group was unchanged at $1.65, and Oceania Healthcare was unchanged at $1.02.

Z Energy fell 2.5 percent to $5.50 as the Commerce Commission's conference on the fuel market study wrapped up its second day. Courier company Freightways fell 0.6 percent to $8.10 and Mainfreight was down 0.5 percent at $39.75.

Outside the benchmark index, Abano Healthcare hit a six-month high and ended the day up 8.9 percent at $4.67 after confirming it has two offers. One, confirmed by ASX-listed 1300 Smiles, is for Abano's Australian Maven Dental chain, while the other - reportedly by BGH Capital - is for the whole business.

Warehouse Group climbed 6.1 percent to $2.45, a two-and-a-half-year high. It reported a 26 percent increase in adjusted profit and the board declared its biggest dividend in five years as a long-term transformation programme starts to bear fruit.

Tower dropped 6.2 percent to 68 cents, adding to yesterday's 5.8 percent slide. The insurer is selling $47.2 million of shares at 56 cents apiece to fund a $13 million acquisition of Youi NZ’s 34,000 policies, and to strengthen its balance sheet.

The Reserve Bank kept the official cash rate at 1 percent today, in line with expectations, although the commentary by the policy committee was not as dovish as some had anticipated.

The central government's 2023 bond paying annual interest of 5.5 percent was the most traded debt security on a volume of 2.2 million. The notes closed at a yield of 0.79 percent, down 12 basis points. The government's 2021 bonds paying 6 percent were the second most traded on a volume of 1.2 million. Those notes closed at 0.82 percent, down 4 basis points.

Trustpower's 2022 bonds paying 4.01 percent closed at 2.37 percent, up 2 basis points, on a volume of 1 million.


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