MARKET CLOSE: NZ shares back at record highs

New Zealand shares rose, pushing the NZX 50 Index to a new record, as a lack of negative surprises during earnings season ensured continued demand for the market's relatively high yields. Genesis Energy, Metro Performance Glass and A2 Milk gained.

The S&P/NZX 50 Index gained 56.91 points, or 0.8%, to 7,462.16. Within the index, 28 stocks rose, 15 fell and eight were unchanged. Turnover was $161 million.

The benchmark index has climbed 209% from its lows of early 2009 in the depths of the global financial crisis. The GFC spurred concerted efforts by central banks to revive economic growth through extraordinary levels of stimulus, including quantitative easing and in the case of Europe and Japan, negative interest rates. In the face of record low interest rates, equity markets shone. On Wall Street, the Standard & Poor's 500 has also recovered from its 2009 lows to reach record highs.

"The path of least resistance has been up," said Greg Smith, head of research at Fat Prophets. "If you look at the lower-for-longer interest rate environment, equities are going to continue to win the beauty prize."

New Zealand has had "a reasonable earnings season" and has an economy that's performing "quite resiliently," especially given the impact of a weak dairy sector and a high Kiwi dollar, he said.

Genesis rose 3.9% to $2.25, leading the index higher. The company reports on Wednesday and is expected to post a normalised full-year profit of $83.7 million from $81.8 million a year earlier, according to brokerage Forsyth Barr. Meridian Energy, which rose 1% to $2.93, also reports on Wednesday and is forecast to post a 12% gain in profit to $233.5 million on strong inflows into hydro lakes.

Among other utilities, Mercury NZ gained 1.3% to $3.04 ahead of its results on Tuesday, and Vector rose 1.2% to $3.53 before its results on Wednesday.

MetroGlass, which has a March 31 financial year, rose 3.5% to $2.08. Ryman Healthcare gained 2.8% to $9.66 and Metlifecare, which reports Wednesday, gained 1.7% to $6.04.

A2 Milk rose 2.8% to $2.24. In June the milk marketing company raised its guidance for full-year sales and earnings, with operating earnings before interest, tax, depreciation and amortisation projected to be $52-54 million.

"It's one of the stocks that opinion has been quite divided on, but it is back to its former highs," Mr Smith said.

Spark NZ rose 2.6% to $4, a 10-year high. Last week the company reported a 1.3% drop in annual profit but announced a special dividend on top of its regular payment and promised a further special dividend in 2017.

"Spark has strong yield appeal," Smith said.

GeoOp fell 3.6% to 27c after the human resources software developer said director Mark Weldon would leave the board at the end of the month to be replaced by an Australian director. Mr Weldon handed over the chairmanship of GeoOp as part of a merger with Australia's InterfaceIT in April, having led the board through a $10 million private offering ahead of its compliance listing on the NZAX.

Heartland Bank rose 2.7% to $1.54. Last week the lender posted a 12% gain in annual profit and announced a bigger dividend after benefiting from low interest rates, which gave it access to cheaper funding.

Fletcher Building climbed 1.5% to $10.53 and Kathmandu Holdings rose 1.5% to $2.03.

Sky Network Television, which reports on Friday, was the biggest decliner yesterday, dropping 2.3% to $4.77. The pay-TV company gave guidance at the time it announced its merger proposal with Vodafone New Zealand in June and is expected to report profit before one-time items of about $150 million, down 13% from a year earlier.

(BusinessDesk)

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