MARKET CLOSE: NZX 50 rises to record on yield appetite; Spark, Fletcher gain

New Zealand shares rose to a fresh record, paced by Spark New Zealand, Fletcher Building and Contact Energy, as investors continued to be drawn to equities for higher yields. Xero climbed to a month-high, as risk appetite returned to the market.

The NZX 50 Index rose 51.349 points, or 0.9 percent, to 5470.339. Within the index, 23 stocks rose, 18 fell and nine were unchanged. Turnover was $110 million.

Lower-than-expected inflation data has seen Reserve Bank governor Graeme Wheeler pause in his tightening cycle after hiking the official cash rate 100 basis points to 3.5 percent between March and September. Stocks held for their reliable income were bought as investors looked for somewhere to park their cash in a low interest rate environment.

Spark, formerly Telecom Corp, climbed 3.3 percent to $3.155. Fletcher Building, New Zealand's largest listed company, increased 2.9 percent to $8.60.

Power generators and retailers, held for their reliable income, extended post-election gains, which removed the threat of any further regulation posed by opposition parties. MightyRiverPower advanced 2.4 percent to $3.03. Contact Energy climbed 1.7 percent to $6.47. Meridian Energy rose 1.2 percent to $1.74. Genesis Energy gained 0.2 percent to $2.215. TrustPower rose 2.4 percent to $7.70.

"The ongoing hunt for income continues," said James Smalley, director at Hamilton Hindin Greene. "It's those trends which have continued post the election and post the latest RBNZ announcement and inflation data, which just shows you investors are really chasing stocks from a yield perspective. A period of relatively political stability on the political landscape has investors coming in and are perhaps not seeing a lot of downside."

Xero, which has fallen 46 percent since the start of the year, climbed 6.3 percent to $18.62. The cloud-based accounting firm bought US online payroll company Monchilla to help drive its expansion in the US. Labour market data out of the US on Friday showed pick up in the world's largest economy, boosting investor's confidence in growth-based, higher-risk investments, Smalley said.

"Xero is having a good bounce back," Smalley said. "That's the market switching to a risk on scenario with growth stocks - those pretty benign inflation figures have investors thinking it's going to be difficult waiting for interest rates to rise, and that data shows it ain't going to happen any time soon."

Pacific Edge, the Dunedin-based biotech firm, rose 2.4 percent to 84 cents. Diligent Board Members Services, the governance app developer, advanced 0.6 percent to $5.02. Outside the benchmark index, ikeGPS, the portable measuring devices developer, climbed 3.5 percent to 88 cents.

OceanaGold Corp, the Melbourne-based gold miner, led the benchmark index higher rising 6.5 percent to $2.30.

Heartland New Zealand rose 1.9 percent to $1.06 after the bank formed through the merger of Canterbury and Southern Cross building societies with Marac Finance appointed Kiwibank executive Richard Lorraway as its new chief risk officer.

NZX, the stock market operator, was unchanged at $1.19. Evolve Education Group confirmed a plans for an initial public offer and a dual listing on the NZX and ASX to fund a series of acquisitions in early childhood education.

Outside the benchmark index, Gentrack Group rose 1 percent to $2.10 after the Financial Markets Authority cleared the utilities and airports software developer's prospectus, after it was forced to cut its annual profit forecast in August, some six weeks after debuting on the NZX.

Acurity Health Group was unchanged at $6.95. Connor Healthcare, which is aiming to buy the 29 percent of Acurity it doesn't already own, has gained agreement from AMP Capital to sell into the offer, provided Acurity first makes a two-for-11 issue of taxable bonus shares.

Comvita rose 1.2 percent to $4.15. The honey-based products manufacturer and exporter has entered into a joint venture with East Taupo Lands Trust, to harvest its hives and secure its honey supply.

(BusinessDesk)