MARKET CLOSE: Shares resume rally on appeal of yields; Xero, Kathmandu, Rakon gain

New Zealand shares rose, resuming a rally that pushed the S&P/NZX 50 Index to a new record last week, as low interest rates continued to draw investors to the equity market in search of higher yields. Xero, Kathmandu, Fletcher Building and Rakon rose, while Spark New Zealand fell.

The NZX 50 gained 35.58 points, or 0.5 percent, to 6,743.6. Within the index, 31 stocks rose, 12 fell and seven were unchanged. Turnover was about $107 million.

The benchmark index fell 0.7 percent on Friday, April 1, having climbed 6.8 percent in the first quarter. With little local corporate news scheduled for this week, the ongoing theme of local returns from fixed income is likely to prevail, brokers said. The dividend yield across the NZX 50 is 4.78 percent, according to Reuters data. New Zealand banks, on average, are offering 3.38 percent for a one-year term deposit, according to interest.co.nz.

"It's still very much an interest rate driven market. The outlook for the economy is certainly ok," said Grant Williamson, a director at Hamilton Hindin Greene. "It's a continuation out of fixed interest into higher yields on equities."

Xero, the cloud-based accounting services company, rose 6.1 percent to $16.50, the highest in more than a month. Kathmandu, the outdoor clothing and equipment chain, gained 3 percent to $1.70, the highest close since late November. The retailer last month posted a first-half profit in line with guidance, from a year-earlier loss, and said its operating margin had widened.

Fletcher Building, the construction and building supplies group, rose 2.8 percent to $7.83 and New Zealand Refining, which operates the nation's only oil refinery, rose 2.2 percent to $3.19.

Steel & Tube Holdings, which sells steel building products to the construction industry, rose 2.2 percent to $2.29, while Meridian Energy gained 2.1 percent to $2.665 and Mighty River Power rose 2.1 percent to $2.92. Spark New Zealand, the telecommunications retailer, fell 2.3 percent to $3.48 and was the leading decliner on the index.

New Zealand Oil & Gas rose 1 percent to 48.5 cents after the energy company said it would delist its stock from the ASX because the shares were little traded across the Tasman and the move would save about $400,000 in annual costs.

Outside the NZX 50, Rakon jumped 12 percent to 28 cents after the communications technology company said it had taken a cornerstone stake in Australian start-up Thinxtra, which is to be the vehicle for French company Sigfox to roll out a new "internet of things" network in Australia and New Zealand. Rakon said the investment is expected to contribute to earnings by 2018.

Wynyard Group fell 2.2 percent to 90 cents after the security software company said it hired Iain Lobban, former director of the British intelligence agency GCHQ, as a strategic adviser on Cyber Security. Vista Group International was unchanged at $5.40 after announcing it had bought a 50 percent stake in UK-based movie marketing company Powster for an undisclosed sum.

IkeGPS rose 3.2 percent to 65 cents after the laser measurement tool developer said annual sales were at the bottom end of its lowered guidance because $2.2 million of orders received in the final month of its current financial year would be booked in the 2017 financial year.

(BusinessDesk)