MARKET CLOSE: NZ shares gain as yield hunt sees biggest Spark volume in five years
New Zealand shares rose as international investors' hunt for high-yield stocks saw the biggest volume of Spark New Zealand stock change hands in almost five years. Meanwhile, Comvita plunged after the honey products maker warned of lower earnings.
The S&P/NZX 50 index increased 20.52 points, or 0.3 percent, to 7,244.54. Within the index, 21 stocks gained, 18 fell and 11 were unchanged. Turnover was a bigger-than-usual $347 million, due largely to $187 million of trading in Spark shares.
Spark rose 0.8 percent to $3.64, with 40 million shares trading at $3.65 in one trade, and has advanced 8.2 percent in the past week, as foreign investors are attracted to New Zealand's relatively high dividend yields. Spark is trading at a dividend yield of 6.9 percent, according to Reuters data. A total of 51 million shares changed hands today, the most since Aug. 27, 2012.
"There's been quite strong demand for yield across a number of firms and Spark is one of them," said James Lindsay, a senior portfolio manager at Nikko Asset Management. "In the last few weeks that dynamic has flowed through from the US and other markets and has come here."
Electricity generator-retailers, which typically offer attractive dividend yields, have also benefited, with Meridian Energy up 0.4 percent to $2.90. Trustpower, which is holding an investor briefing tomorrow, fell 0.4 percent to $4.56, and its controlling shareholder Infratil gained 1.2 percent to $2.93.
Sky Network Television led the benchmark index higher, gaining 3.5 percent to $3.89.
Comvita was the worst performer on the NZX 50, sinking 17 percent to $7.10, a month-low. The Te Puke-based honey products maker warned it would deliver an annual operating loss, having previously picked a profit, as it struggles with a clamp down in China's informal trading channels and as weather saps the company's honey harvest.
Lindsay said Comvita was struggling with the transition in China's 'grey' market, in contrast to A2 Milk Co which has managed the new rules well. A2 shares rose 3 percent to $3.07 on turnover of $21.3 million.
NZX advanced 0.9 percent to $1.07 after the stock market operator's monthly sharemarket metrics showed the value of trading fell for a third month in March, even as the volume of trading rose.
Summerset Group gained 2.3 percent to $5.35 after the retirement village operator and developer said first-quarter sales of occupation rights were up 41 percent and that the outlook for the year was positive. Rivals Metlifecare rose 0.8 percent to $6.09 and Ryman Healthcare increased 2 percent to $8.73.
Vital Healthcare Property Trust was unchanged at $2.06 after the hospital investor said it bought two properties in Australia for A$27.6 million.
Fletcher Building fell 3.3 percent to $8.04 on turnover of $39.2 million,
Outside the main index, Allied Farmers rose 9.4 percent to 7 cents after the rural services firm said it could be in the running for a bigger payday from a group of loans it sold four years ago. The Hawera-based company sold the loans to LPF Group, which is funding litigation against Property Ventures and its auditor PwC. The 2014 claim for between $240 million and $320 million made in 2014 was accruing a 20 percent interest compounding monthly, and defence counsel has speculated it could rise beyond $1 billion.
CBL Corp shares declined 1.7 percent to $3.49 after the insurer's directors and management sold 8.5 percent of the company once a restriction on their holdings was lifted. The shares were sold at $3.26/A$3 apiece to Australian and New Zealand investors.
IkeGPS dropped 3.9 percent to 37.5 cents after the laser measurement tool maker said it missed its target to be cash flow positive in the March quarter after a customer delayed a large order of devices.
Scott Technology gained 2.9 percent to $2.80 after the industrial robotics maker said first-half profit rose 25 percent to $2.5 million on a 32 percent gain in revenue to $56.7 million. The Dunedin-based company said the gain was helped by recent acquisitions and commercial uptake of its own developments.