MARKET CLOSE: NZ shares rise on yield hunt; Spark, AIA, Mainfreight gain
By Suze Metherell
Sept. 8 (BusinessDesk) - New Zealand shares rose on demand for income-paying stocks ahead of this week's expected
interest rate cut by the Reserve Bank. Spark New Zealand led stocks higher, as Auckland International Airport and
Mainfreight gained.
The S/NZX 50 Index rose 37.58 points, or 0.7 percent, to 5610.31. Within the index, 29 stocks rose, 18 fell and three were
unchanged. Turnover was $152 million.
Governor Graeme Wheeler is expected to cut the official cash rate by a quarter point to 2.75 percent with the quarterly
monetary policy statement on Thursday, 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
China's economic growth is cooling and uncertainty surrounding Greece and the Eurozone.
Income paying stocks rose. Spark, formerly Telecom Corp, led the benchmark index higher advancing 3.9 percent to $3.34.
Auckland Airport, the nation's busiest gateway, rose 1.7 percent to $4.86. Mainfreight, the logistics and courier
company, gained 1.5 percent to $14.92. MightyRiverPower, the government owned energy firm, increased 0.2 percent to
$2.775. Meridian Energy gained 0.2 percent to $2.17.
Demand for dividend yields continues "given the fact we're possibly looking at a cut in the OCR on Thursday," said Peter
Valk, investment adviser at Craigs Investment Partners. "The lower interest rates go the more people will be looking for
alternative stocks that pay a reasonable dividend return."
Volatility was expected to linger, Valk said. "There's no silver bullet that's going to make it go away, we're still
seeing questions regarding China's slowing economy and we're seeing a fair bit of rocking out of Greece."
Fisher & Paykel Healthcare, the breathing apparatus exporter, climbed 2.3 percent to $7.43. The decline in interest rates has
pushed the New Zealand dollar down from its highs, supporting exporters.
Pacific Edge, the biotech firm, was the worst performer on the benchmark index, down 3.1 percent to 46.5 cents.
Coats Group, formerly Guinness Peat Group, declined 1.6 percent to 61 cents.
Fletcher Building, the construction and building supplies firm, fell 1.6 percent to $6.93.
Infratil declined 1 percent to $3.01. Morrison & Co, which is also the manager for the infrastructure investor Infratil, agreed to buy into a wind farm in southwest
Victoria for A$532 million, owned by AGL Energy, Australia's largest listed renewable energy company.
Outside the benchmark index, Smartpay Holdings declined 3 percent to 16 cents after the payment terminal supplier said
it expects earnings to decline for a second year as it rebuilds its Australian taxi business after losing a key
customer.
(BusinessDesk)