Market close: Shares hit new five-year high as Fletcher rally rolls on

New Zealand shares continued their strong run-up since the New Year, with Fletcher Building hitting a new five-year high of $9.52, although Fonterra Shareholders Fund units dropped below $7 for the first time this year as fallout from the DCD issue continued.

The NZX 50 Index rose 5.101 points, or 0.12 percent to 4252.647, its highest since late since late October 2007. Despite the overall increase, within the index 17 stocks rose, 21 fell and 12 remained unchanged. Turnover was $126.911 million.

"This is traditional for us," Rickey Ward at Tyndall Investment Management says. "Generally, we start the year strong because people think it can't get worse, and then you get the earnings season and that tends to temper enthusiasm."

However, signs in the world and local economies at the beginning of 2013 look stronger than they have for some time and a further rise in the New Zealand market is conceivable.

"Eight to 10 percent would be a logical move from here and you could easily justify a higher number than that," based on New Zealand shares' relatively high dividend yields compared to other markets, he says.

However, it was still likely many companies would reflect tough 2012 trading conditions in their half-year results, set for release to the NZX over the next few weeks.

"Corporates are often not comfortable enough to predict the next 12 months," he says.

Leading the index higher today was dual-listed OceanaGold, up 3.82 percent to $3.26, Restaurant Brands, up 1.81 percent to $2.81, and New Zealand Oil & Gas, which announced a return to two dividends a year and positive exploration plans earlier this week. NZOG shares closed up 1.69 percent on the day, at 90 cents.

Index heavyweight Fletcher Building was up 1.38 percent to $9.52, its highest in almost five years.

Meanwhile, FSF units sank 0.71 percent to $6.98, having been above $7 since December 12.

While the DCD issue appeared not to involve serious risks for Fonterra, no bad publicity was welcome, especially in the crucial Chinese market, where the People's Daily editorialised critically at Fonterra's handling of the discovery of tiny traces of the chemical in milk powder last September.

Fertiliser firms withdrew DCD from sale last Friday. Since then, FSF units have fallen from $7.23.

"We expect them to report some reasonable results," Mr Ward says.

(BusinessDesk)