Market close: shares rise as Fonterra, Ryman, Xero, Diligent, A2 hit records

New Zealand shares rose, pushing the NZX 50 Index to a new high, as the continued shift away from fixed-income investments underpinned demand and drove Fonterra Shareholders' Fund, Ryman Healthcare, Xero, Diligent Board Member Services and A2 Corp to record highs.

The NZX 50 climbed 32.25 points, or 0.7 percent, to 4580.96. Within the index, 27 stocks rose, 13 fell and 10 were unchanged. Turnover was $105 million.

The index is up about 12 percent so far this year and at that run rate may match last year's 25 percent gain.

New Zealand shares are benefitting from what financial markets have dubbed the great rotation, where thin returns from bonds and deposits drives investors up the risk ladder to equities in search of stronger gains.

Greg Easton, an adviser at Craigs Investment Partners, says New Zealand stocks may have further to run relative to offshore markets.

While the NZX 50, a gross index that includes dividends, has surpassed its 2007 highs, on a capital basis the market is still about 25 percent below its highs of six years ago, unlike overseas markets that have "blown past their 2007 highs."

"People just want to get on the train," Mr Easton says. "There's nowhere else to go. Some of the rises are quite staggering."

Fonterra, which listed on November 21, rose 4.5 percent to $7.66.

Metlifecare, the retirement village operator, climbed 4.2 percent to $3.49, the highest since October 2008. Rival operator Ryman gained 3.5 percent to a record $5.93. With a dividend yield of just 2.4 percent, its gains underline that investors are not just looking for yield any more, Mr Easton says.

Xero, which has grown to a $1.6 billion company without making a profit, rose 1.7 percent to a record $14.04 as investors continued to bet on its long-term earnings potential provided it keeps winning market share.

Diligent, which has attempted to clean up discrepancies in its CEO’s options, gained 5.3 percent to $7.50 – a 12-month gain of 103 percent.

A2 Corp, which markets milk with a protein variant it claims has health benefits, rose 1.5 percent to 69 cents, a record close. The company is beginning shipments of infant formula to China under an agreement with milk processor Synlait Milk.

Westpac Banking Corp rose 1.3 percent to $40, making it one of the few companies on the NZX to ever get that high. Sky Network Television, the nation's pay-TV company, was up 1.4 percent to $4.40, the highest close since May 2007.

Telecom rose 1.2 percent to $2.595 after announcing it had has bought local data centre firm Revera for $96.5 million as it looks to get greater coverage in the cloud and build IT services.

Vector rose 1.1 percent to $2.84 after being cleared to buy Contact Energy's gas metering business for $63 million. Contact fell 0.8 percent to $5.31.

Fletcher Building rose 0.9 percent to $8.74.

(BusinessDesk)