Market close: Shares fall as yield story runs out of puff, Telecom drops

BUSINESSDESK: New Zealand shares fell, led by Telecom, as investors looked for reasons to drive the market higher after offshore demand for dividend yields drove the NZX 50 Index to a five-year high this month.

The NZX 50 fell 32.48 points, or 0.8%, to 3951.29. Within the index, 29 stocks fell, 15 rose and six were unchanged. Turnover was a lower-than-average $66 million.

Telecom sank 3.5% to $2.38. At today's price it has a dividend yield of 12.1%, almost triple the 4.32% on an average one-year term deposit, according to interest.co.nz.

Faced with interest rates near record lows, investors have turned to the equity market for better returns, sending money into the best-yielding stocks.

Goodman Property Trust, up 0.5% to $1.06, has a dividend yield of 8%. Precinct Properties NZ rose 1.5% to $1.035 and has a dividend yield of 6.59%.

Kiwi Income Property Trust, up 0.4% to $1.175 for a dividend yield of 7.47%.

Offshore money and the general increase from KiwiSaver have helped push the NZX 50 above 4000 for the first time since early January 2008.

"We had a fairly good run and the market needs something to kick it along," says David Price, a broker at Forsyth Barr. "A lot of savers are being penalised with interest rates so low. What's driven the rally so hard has been yields."

Restaurant Brands rose 4.1%, leading the index higher. The company has a dividend yield of about 9.9%. Trade Me, the auction site that holds its annual meeting tomorrow, rose 1.6% to $4.45.

Among smaller caps, cashed-up department store operator Kirkcaldie & Stains soared 25% to $3.25 on speculation the company could return capital after selling a property worth more than its market capitalisation.

David Cushing, whose family owns almost 20% of the company, says the shares are worth even more.

Among the biggest stocks, Freightways fell 2.7% to $4.28, trimming this year's gain to about 20%. TrustPower fell about 2% to $8.55.

New Zealand Oil & Gas fell 1.7% to 85 cents. The company said today it farmed out a 25% stake in its Kaheru prospect off the South Taranaki coast to ASX-listed Beach Energy for $US3 million.

Fletcher Building fell 0.7% to $7.07 as the government unveiled a series of long-term measures to lift housing affordability including a review of supply-side construction costs.

Acurity Health Group was unchanged at $5.91 after it said chief executive Andrew Blair will step down as the head of the private hospital operator once-known as Wakefield Health after six years in the top job.

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NZ Market Snapshot

Forex

Sym Price Change
USD 0.7845 0.0017 0.22%
AUD 0.8994 0.0002 0.02%
EUR 0.6203 0.0010 0.16%
GBP 0.4929 0.0003 0.06%
HKD 6.0847 0.0131 0.22%
JPY 84.0120 0.0180 0.02%

Commods

Commodity Price Change Time
Gold Index 1233.8 -1.760 2014-10-14T00:
Oil Brent 85.4 -4.470 2014-10-14T00:
Oil Nymex 81.2 -4.530 2014-10-14T00:
Silver Index 17.4 0.035 2014-10-14T00:

Indices

Symbol Open High Last %
NZX 50 5145.9 5168.7 5145.9 0.33%
NASDAQ 4246.2 4281.3 4213.6 0.32%
DAX 8765.4 8854.4 8812.4 0.15%
DJI 16321.9 16463.7 16321.1 -0.04%
FTSE 6366.2 6403.4 6366.2 0.42%
HKSE 23087.5 23230.3 23048.0 0.67%
NI225 15009.8 15044.3 14936.5 -0.13%