MARKET CLOSE: NZX 50, Meridian, Genesis at record highs after dovish RBNZ

New Zealand's benchmark NZX 50 Index rose to a record after the Reserve Bank signalled a slower pace of future interest rate hikes and investors bet a returning National government would ensure power companies such as Meridian Energy can maintain their dividend yield. Sky Network Television extended its gains after a selloff at the start of the week.

The NZX 50 rose 25.667 points, or 0.5 percent, to 5262.324. Within the index, 31 stocks rose, nine fell and 10 were unchanged. Turnover was a lower than usual $74 million.

The Reserve Bank kept its official cash rate unchanged at 3.5 percent, saying it wanted to assess the impact of 100 basis points of increases since March. Governor Graeme Wheeler flagged a slower pace for future rate hikes, meaning monetary policy may be less of a brake on economic growth than feared.

"Having a lower track in interest rates going forward is a good thing" for equities, said James Lindsay, who helps manage $400 million at Tyndall Asset Management. "Most people thought there would be some tempering of the medium-term views, but they were quite dovish in the way they signalled rates."

Meridian led the benchmark index higher, gaining 4.4 percent to a record $1.41. Genesis Energy advanced 1.3 percent to a record close of $1.925. Contact Energy climbed 1.4 percent to a four-month high of $5.73. MightyRiverPower rose 0.2 percent to $2.445, the highest its been since May last year, before the opposition political parties announced their electricty power plans.

Political polls show it is likely the National-led government returning for a third term led by Prime Minister John Key ahead of the general election on Sept. 20. Energy stocks are the most prone to be sold ahead of any electoral uncertainty, as the opposition Green and Labour parties have promised to introduce a state-owned single electricity buyer in a bid to push down retail prices.

"The most recent polls looks like the government have been able to maintain their ground at least and that will certainly help," Lindsay said "If it wasn't for the Labour Greens policy Meridian would have already been there already, so it has been holding back the sector a lot."

Sky TV rose 2.2 percent to $6.39, recovering from a 2.2 percent drop earlier in the week, that saw a high volume of the shares change hands, most likely from Australian investors. New Zealand's dominant pay-TV company failed to renew the broadcast rights to US PGA Golf, European PGA Golf and the PGA Asian Tour Golf. Pay-TV providers are coming under increasing pressure as their audience base turns to free, albeit not always legal, options online.

"Sky TV is rebounding off its lows," Lindsay said. "Two things that had driven the stock down was the loss of the golf and Foxtel in Australia halving the price of its basic package. Those two factors drove the stock down and then we had some Aussie selling based on that. Now the stock is recovering."

Infratil, the infrastructure investor that owns 66 percent of Wellington International Airport, increased 0.6 percent to $2.50. An EY report published today builds the case for a $350 million runway expansion which Infratil would seek to have substantially funded by local and central government.

Fletcher Building, New Zealand's largest listed company, slipped 0.1 percent to $9.14. Spark New Zealand, formerly Telecom Corp, fell 0.3 percent to $3.02. Air New Zealand, the national carrier, was the worst performer on the NZX 50 Index today, dropping 4.5 percent to $2.015.

Outside the benchmark index, Turners & Growers was unchanged at $1.95 after the fruit marketer majority owned by Germany's BayWa annoucned a joint venture with Unifrutti Chile to grow and export Peruvian grapes. It didn't disclose any financial details surrounding the deal, but will begin planting in Peru later this year with first commercial volumes harvested in late 2015.

(BusinessDesk)