MARKET CLOSE: Shares fall led by Pacific Edge; MRP, Spark gain

 New Zealand shares fell, led by Pacific Edge and Tower as investors looked to cash in some profits on fully-valued stocks ahead of the upcoming reporting season. Companies with steady income streams such as MightyRiverPower, Spark New Zealand and Contact Energy rose.

The NZX 50 Index fell 4.921 points, or 0.1 percent, to 5633.216. Within the index, 20 stocks fell, 21 rose and nine were unchanged. Turnover was $107 million.

Investors are looking to the upcoming reporting season to justify the benchmark index's 1.2 percent gain since the start of the year. It has outperformed Australia's S&P/ASX 200 Index's 2 percent decline and Japan's Nikkei 225 Index's 1 percent fall as buyers seek the relatively high yield on offer in New Zealand.

Pacific Edge, the growth-orientated biotech company, led the benchmark index lower falling 3.9 percent to 74 cents. Tower, the general insurer which has gained 4.7 percent since the start of the year, dropped 3.6 percent to $2.17. Chorus, the network infrastructure operator which has frozen its dividends, fell 1.4 percent to $2.555.

"Some of these stocks are pushing towards or beyond their current valuation status," said Nigel Scott, director at Craigs Investment Partners. "The Dec. 31 updates through the second-half of February will be interesting. Within that mix interest rates have globally gone lower, so New Zealand is still a high yielding country versus everyone else."

Stocks with relatively high dividend streams continued to attract investors ahead of the European Central Bank policy meeting on Thursday, which is expected to see the introduction of a quantitative easing programme. That would continue to keep global interest rates low, increasing the lure of stocks offering steady incomes.

MRP, the government-controlled energy company, climbed 1.7 percent to $3.335. Spark, formerly Telecom, rose 0.6 percent to $3.34. Contact rose 0.3 percent to $6.69.

"The market hasn't change its view that it's looking for solid yield," Scott said. "How far do interest rates come down? The inverse of interest rates is share price rising for yield.

"Investors are trying to hold onto good stories and look for good growth," Scott said. "New Zealand is still moderate growth story and strong yield versus competitors and people are wanting to pay up for it."

Outside the benchmark index, Hallenstein was unchanged at $3.41, after an intraday gain to as high as $3.46, after the retail chain yesterday said it expects first-half earnings to rise by about a third to between $8.1 million and $8.3 million, after robust Christmas trading with positive growth continuing through January.

Kathmandu, the outdoor goods retailer, was the NZX 50's best performer on the day, rising 2.1 percent to $1.97 on positive retail sentiment. Warehouse Group, New Zealand's largest listed retailer, advanced 1.2 percent to $2.62.

Outside the benchmark index, New Zealand Refining climbed 9.2 percent to a 22-month high $2.50 after the Marsden Point refinery operator flagged a return to annual profit in 2014 after widening margins, cheaper crude oil and a favourable exchange rate turned around the company's performance from the middle of the year.

"The very rapid turnaround in refining margins, coupled with the weaker kiwi, is the key," said Matthew Goodson, managing director at Salt Funds Management. "The kiwi/US exchange rate has retreated back from its recent highs, and they are clearly a beneficiary of that."

OceanaGold Corp, which operates the Macraes goldfield in Otago, rose 3.6 percent to $2.61 after it beat copper and gold production expectations in 2014 as its Didipio operation in the Philippines exceeded forecasts, and the mining company anticipates that higher production to continue this year.

(BusinessDesk)