Market close: Shares gain as yield appeal endures, Telecom up

BUSINESSDESK: New Zealand shares rose, pushing the NZX 50 Index above 4000 for only the second time since January 2008, as low interest rates at home and abroad lifted the appeal of returns from equities in markets known for their relatively high dividend yields.

Telecom paced the advance.

The NZX 50 rose 16.09 points, or 0.4%, to 4004.25. Within the index, 26 stocks rose, 15 fell and nine were unchanged. Turnover was $120 million.

Telecom gained 0.8% to $2.475 and was the most heavily traded stock, accounting for about 40 of total turnover. The stock has a dividend yield of 12.2%, while an average two-year term deposit pays 4.39%, according to interest.co.nz.

Fisher & Paykel Healthcare, which has a dividend yield of 5.2%, rose 2.5% to $2.43, while Freightways, with a yield of 6.2%, was up 2.1% to $4.43.

"It's the same old story. Investors chasing yield in the market," says Grant Williamson, a director at Christchurch-based brokerage Hamilton Hindin Greene. With markets closed for Labour Day yesterday, New Zealand missed out on the effects of a Friday selloff on Wall Street, he says.

Goodman Property Trust rose about 1% to $1.06. It has a dividend yield of 8.1%.

NZ Oil & Gas fell 1.7% to 86.5 cents after missing out on acquiring a stake in a deepwater exploration permit in the Taranaki basin because the existing partners exercised their right to buy it.

The Wellington-based company has been blocked from buying a 6.7% stake in the 16,380sq km petroleum exploration permit off the Taranaki coast after operator Anadarko and Hyundai Hysco exercised their first-buyer rights.

NZOG had agreed to pay $US9.5 million to the operation's minority partners, Global Resources Holdings and Randall C Thompson LLC.

Among smaller caps, L&M Energy soared 37% to 7.4 cents after chairman Geoff Loudon made a full takeover bid for the Wellington-based oil and gas explorer at a 45% premium to its last trading price.

Mr Loudon, via his newly incorporated New Dawn Energy, is offering 6 Australian cents a share to take full control of L&M, valuing the company at $A45.3 million. New Dawn has entered into lock-up arrangements securing almost 72% acceptances, and will only declare the deal unconditional if it can take full ownership of the energy explorer.

Warehouse Group was the biggest gainer on the day, rising 4.2% to $3.25. NZX, the stock market operator and regulator, was up 3.3% to $1.27.

Fletcher Building rose 0.1% to $7.38. SkyCity Entertainment fell 1.8% to $3.92.