MARKET CLOSE: Shares rise on broad based rally, Xero, Telecom, property stocks gain
New Zealand stocks rose in a broad-based rally. Xero extended its gains, leading the benchmark index higher, while investors also returned to companies offering reasonable dividends, such as Telecom and property trusts.
The NZX 50 Index rose 48.082 points, or 0.9 percent, to 5115.489. Within the index, 31 stocks rose, nine fell and 10 were unchanged. Turnover was $137 million.
New Zealand tech stocks were sold off sharply earlier this week following declines in the tech-heavy Nasdaq Composite Index on fears too much earnings optimism was built into their prices.
Xero, the cloud-based accounting software company, rose 3.1 percent to $33.10 although it is still down 32 percent on the month. Telecom advanced 0.8 percent to $2.60, accounting for about a fifth of total turnover on the day. The stock is attractive to investors with its relatively high dividend yield of 6.2 percent. By contrast, a two-year term deposit on average is offering 4.67 percent.
DNZ Property Fund gained 1.6 percent to $1.55, Property For Industry lifted 1.2 percent to $1.29 while Goodman Property Trust climbed 1 percent to 97 cents. Precinct Properties New Zealand was up 0.5 percent to $1.00.
"In general there has probably been a slight move from growth to value over the last couple of weeks and I think that's happened around the globe," said Nigel Scott, director at Craigs Investment Partners.
He said the broad based rally, where "even property stocks are up" was in part as investors paid a premium to enter New Zealand's relatively low-liquidity market. Some 50 million shares changed hands on the NZX 50, compared to about 539 million on Australia's S&P/ASX 200 Index.
Milk marketer a2 Milk Co was unchanged at 87 cents, but has gained 55 percent in the past 12 months. Pacific Edge, makers of a non-invasive bladder cancer detection test which has risen 104 percent in the past year, was unchanged at $1.22.
Outside the benchmark index tech stocks were mixed. SLI Systems, the search engine developer, climbed 0.9 percent to $2.05. GeoOp, the small business task manager app, was unchanged at $1.50. Wynyard Group, the security software firm, slipped 2 percent to $2.50.
Fletcher Building, New Zealand's largest listed company, rose 0.5 percent to $9.64. The nation's carrier, Air New Zealand, advanced 1.5 percent to $2.08, while Auckland International Airport gained 1.8 percent to $3.93.
Warehouse Group was unchanged at $3.20. New Zealand's largest listed retailer today announced it had raised $15 million in a share purchase plan, although investors had cooled on the offer, with $4.2 million taken up by its underwriter Deutsche Craigs.
Brisbane-based jeweller Michael Hill International declined 0.7 percent to $1.35. Trade Me Group, the online auction website, rose 3.1 percent to $3.98 while Kathmandu Holdings, the outdoor goods retailer, was unchanged at $3.76.
Casino operator SkyCity Entertainment Group rose 0.3 percent to $3.97. Sky Network Television advanced 2.1 percent to $6.45.