NZ shares gain; yield stocks Contact, Meridian still in favour

New Zealand shares rose as the low interest rate outlook continues to add to the lustre of companies with reliable dividends such as Contact Energy and Meridian Energy.

Monday, September 2nd 2019, 7:47PM

by BusinessDesk

The S&P/NZX 50 Index rose 42.80 points, or 0.4 percent, to 10,800.00. Within the index, 29 stocks rose, 10 fell, and 11 were unchanged. Turnover was $87.8 million with just five stocks trading on volumes of more than a million shares.

Stocks across Asia were mixed as investors assess the impact of the new trade tariffs imposed between the US and China. The trade war between the world's two biggest economies has stoked volatility in markets and encouraged central bankers to keep interest rates low. That, in turn, has made stock markets such as New Zealand more attractive due to the dominance of utilities and property companies that pay reliable dividends.

Among those yield plays, Contact rose 2.9 percent to $8.62 on a volume of 1.1 million shares and Meridian was up 1.8 percent at $5.07. Property For Industry increased 1.5 percent to $2.39 and Vector advanced 1.4 percent to $3.61.

"We've got negative interest rates in Europe, and here term deposits are near enough - once you pay tax and inflation you're not going far," said Grant Davies, an investment advisor at Hamilton Hindin Greene.

"Those low interest rates are helping to push up the usual suspects."

ANZ Bank New Zealand's 2021 bond paying annual interest of 4 percent was the most traded debt security on a volume of 320,000. It closed at a yield of 1.34 percent.

Ryman Healthcare led the market higher, up 3.2 percent at $13.43 on a volume of 242,000 shares, less than its 90-day average of 467,000 shares. Of other retirement village operators, Arvida Group increased 1.5 percent to $1.36, Metlifecare increased 0.2 percent to $4.36, Summerset Group fell 0.7 percent to $6, and Oceania Healthcare was unchanged at $1.03.

Davies said the weaker New Zealand dollar - trading near four-year lows - supported exporters. Skellerup increased 2.7 percent to $2.29, Pushpay Holdings rose 1.6 percent to $3.10 and Fisher & Paykel Healthcare was up 1.4 percent at $16.89.

Precinct Properties New Zealand was the most traded stock on a volume of 2.2 million shares, more than twice its 912,000 average. It was unchanged at $1.865. Kiwi Property Group was also unchanged at $1.63 on a volume of 1.6 million shares.

Spark New Zealand fell 0.2 percent to $4.41 on an unusually small volume of 628,000 shares.

Vista Group International posted the day's biggest decline, down 2.7 percent at $3.93 on a volume of 1.5 million shares, more than three times its 443,000 average.

Fletcher Building decreased by 0.7 percent to $4.41 on a volume of 1.2 million shares.

Fonterra Shareholders' Fund units increased 0.3 percent to $3.32. Fonterra Cooperative Group's biggest shareholder, Colin Armer, today said he's lodged a complaint with the Financial Markets Authority over the dairy exporter's accounts. Fonterra will report its annual earnings next week and is poised to post a loss of up to $675 million.

Synlait Milk reports the same day as Fonterra. It fell 0.5 percent to $9.30.

Infratil was unchanged at $4.55 after completing the sale of NZ Bus to Next Capital. It said it's received upfront cash of $93 million, with earn-outs and vendor finance paid over the next five-and-a-half years.

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