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.
This article is tagged with the following keywords. Find out more about MyNBR Tags
Most listened to
- NBR Radio Rich List Special: Interviews with Rich Listers, philanthropists, property gurus, investors and much, much more
- “An RBA interest rate cut is pretty much a done deal,” says Capital Economic's Paul Dales
- Japan’s Prime Minister Shinzō Abe opens the floodgates to more stimulus. Join NBR's Jason Walls as he explains why
- Despite a few howls of protest, land economics expert Adam Thompson rates the Auckland Unitary Plan
- Hamish McNicol discusses the Serious Fraud Office’s warning to companies about employee fraud