MARKET CLOSE: Shares bounce from month-low; Spark gains on Fed

 New Zealand shares rose from a month-low as the prospect of low US interest rates lured overseas investors seeking high-yield assets. Meridian Energy and Spark New Zealand paced the gain.

The NZX 50 Index rose 11.842 points, or 0.2 percent, to 5154.182. Within the index, 25 stocks rose, 18 fell and seven were unchanged. Total turnover was $144 million.

The local market followed Wall Street higher, bouncing from its lowest close in a month yesterday, after US Federal Reserve policy makers said interest rates would be near zero for a "considerable time" and prepare to wrap up their monthly bond buying programme at the end of October. Higher US interest rates would encourage some investors to repatriate funds back to the world's biggest economy which have been sitting in yield-bearing assets around the world.

Spark snapped two days of decline to rise 0.9 percent to $2.97. The telecommunications company is a popular stock with foreign investors because of its liquidity and high dividend yield. Meridian led the benchmark index higher, climbing 3.3 percent to $1.415. Contact Energy increased 0.5 percent to $5.60.

"The Fed came out this morning and is still continuing on a programme of buying bonds, but also given a bit more of a statement about where interest rates are going to go for the next few years," said Craig Stent, director at Harbour Asset Management. "There is a future path of interest rate hikes, but at the same time they're continuing on with bond purchases, so it is the good and the bad" for equities, as the flood of newly printed money needs to be invested somewhere, he said.

Stent said much of yesterday's fall to a month-low close came as institutional investors reweighted portfolios.

Heartland New Zealand, the bank formed from the merger of Canterbury and Southern Cross building societies and Marac Finance, advanced 3.1 percent to $1.01, paring some of its 3.9 percent drop yesterday. SkyCity Entertainment Group, the casino operator, rose 0.6 percent to $3.63, regaining part of its 3.2 percent fall.

Kathmandu Holdings, the outdoor goods retailer, fell 1.3 percent to a year-low $2.95. Warehouse Group, New Zealand's largest listed retailer, rose 0.3 percent to $3.07. Trade Me Group, the online auction site, advanced 0.3 percent to $3.49.

Fletcher Building, New Zealand's largest listed company, was unchanged at $8.78.

Outside the benchmark index, Trilogy International declined 1.5 percent to 65 cents. The skincare and scented candle company said it expects to post a first-half profit of $860,000 as sales in Australia picks up.

NZF Group, the financial services company suspended from trading, has entered into a non-binding agreement with an unidentified business for a possible reverse listing, and expects to seal the deal by the end of the month. It also held its annual general meeting in Auckland today. The shares last traded at 1 cent.

(BusinessDesk)