MARKET CLOSE: NZX edges up to record, Chorus falls to six-week low
New Zealand shares rose, with the NZX 50 Index edging up to a new record, as optimism about growth in the economy lifted stocks including Fletcher Building. Chorus fell to a six-week low amid a political argument over its network pricing.
The NZX 50 rose 5.803 points, or 0.1 percent, to 4703.83. Within the index, 16 stocks rose, 22 fell and 12 were unchanged. Turnover was $124 million.
"The key positive is that this economy is starting to recover. Earnings are moving up somewhat on the back of that," said Matthew Goodson, managing director at Salt Funds Management. "From our modelling, the market is fully and fairly valued at current levels."
"The key negative is bonds have sold off very sharply, so the rate at which you discount earnings has risen," he said. "That's a key reason why the property sub-index has tipped over of late."
The yield on benchmark 10-year government bonds has climbed almost 30 basis points this month to around 4.85 percent.
Fletcher, the biggest company on the NZX 50, rose 1.5 percent to $9.64. Contact Energy rose 2.3 percent to $5.29. Tower, the general insurer, rose 2.2 percent to $1.86, extending its gains since flagging an initial $70 million capital return from the sale of its life business.
Kiwi Income Property Trust fell 0.9 percent to $1.10, leading most property investors lower as rising bond yields sapped their appeal. Argosy Property fell 0.5 percent to 93 cents and Goodman property Trust shed 0.5 percent to $1.01.
Chorus, the network company spun off from Telecom in 2011, fell 1.4 percent to $2.83 as a coalition of internet companies and consumer groups called on Australian regulators and the ASX to look into claims the company could fail should the Commerce Commission's network pricing recommendations be imposed.
"Chorus is reacting to the political noise," Goodson said. It had been clearly understood that the draft Commerce Commission finding was "highly likely to be revised." The final pricing "must be based on replacement cost of the assets."
Stocks were mixed among companies to shed rights to their dividends today. Telecom Corp fell 0.7 percent to $2.26, Port of Tauranga declined 0.9 percent to $14.10, and Heartland New Zealand dropped 0.6 percent to 85 cents. SkyCity Entertainment Group gained 0.5 percent to $3.89, Briscoe Group gained 0.2 percent, while Seeka Kiwifruit Industries and South Port New Zealand were unchanged at $1.97 and $3.554 respectively.
Fast food operator Restaurant Brands gained 1.5 percent to $2.80 after the company said it lifted second quarter sales 6.2 percent, led by the roll-out of its new Carl's Jnr burger chain.