MARKET CLOSE NZX 50 sets new record; Xero, Ryman rise, Chorus drops

New Zealand's benchmark NZX 50 Index set a record high for a second day as Xero continued to soar and Ryman Healthcare paced a rally in retirement village operators. Chorus fell as ratings agencies said they may cut its credit ratings.

The NZX 50 rose 5.866 points, or 0.1 percent, to 4944.568. Within the index, 17 stocks rose, 24 fell and nine were unchanged. Turnover was a higher-than-average $175 million, driven by trading in Xero, Ryman and Sky Network Television.

Xero rose about 13 percent to $37.30, valuing the unprofitable company with annualised revenue of about $70 million at $4.8 billion. That means it has overtaken Telecom and Auckland International Airport to be the second-largest company on the NZX 50. The shares have soared since mid-October when it raised $180 million, mainly from US investors.

"The market is excited but wary of Xero," said Nigel Scott, a director at Craigs Investment Partners. "There's a phenomenal amount of expectation built in."

While US investors are accustomed to IT stocks, "this is new ground for New Zealand and also the impact it has on indexation," he said.

Tech companies generally have been on a roar. New NZAX listing GeoOp soared 23 percent to $3.64, giving a windfall gain to investors who bought in at $1 in a private sale. Diligent Board Member Services gained 7.8 percent to $4.69. Pacific Edge was up 3.4 percent to $1.18 and has increased 138 percent this year.

Ryman, the biggest retirement village operator on the bourse, rose 1.8 percent to a record close of $7.91. Metlifecare gained about 2 percent to $4.16 and Summerset Group gained 0.9 percent to $3.37, also a record.

"This theme has been running quite strongly for quite some time," Scott said. "There may be some ongoing order flow in Ryman, Summerset and Metlifecare."

He said money is still broadly flowing into the market, helping stocks such as Sky TV, up 0.2 percent to $6.27 and Auckland Airport, which rose 0.3 percent to $3.53. Investors had heightened expectations for some of the star performers on the NZX and "it looks like earnings have to catch up to expectations."

Chorus sank 5.5 percent to $2.315, adding to yesterday's 6.8 percent drop when the telecommunications regulator said he planned to cut prices the network company can charge for access to its copper lines by about 23 percent. Today Moody's Investors service and Standard & Poor's both said they were reviewing Chorus's credit rating, now the second lowest investment grade, for a possible downgrade. Its dividend yield, 7.8 percent on a trailing basis, has been part of the stock's appeal.

"The company has to work out its strategy from here," Scott said. "Does it hold is dividends or cut them? Will the government look to do anything before 2014?"

Telecom fell 1.1 percent to $2.305 and Fletcher Building declined 2.4 percent to $9.50.

TrustPower, the power company controlled by Infratil, fell 1.6 percent to $6.67 after reporting an 8 percent decline in first-half underlying earnings as the power company faced lower hydro-generation and thinner margins in a competitive retail environment.

(BusinessDesk)