MARKET CLOSE: Shares rise as investors chase yield; Genesis, property trusts gain

New Zealand stocks rose as investors were lured to high yielding stocks, such as Genesis Energy and Meridian Energy, as interest rates look to set to stay low in the US. Xero fell after an update on its US expansion plans disappointed traders.

The NZX 50 Index rose 20.136 points, or 0.4 percent, to 5266.037. Within the index, 26 stocks rose, 18 fell and six were unchanged. Turnover was $133.8 million.

Investors pulled back their bets on an early start to higher US interest rates after the Federal Reserve signalled concerns about the strength of the world's biggest economy in minutes to its September policy meeting. International investors had been repatriating funds home, ahead of the Fed winding down its bond buying programme, on the expectation rates would soon begin to rise.

Energy companies and property trusts, which typically offer relatively high dividends, rose on the prospect of interest rates staying lower for longer. Meridian advanced 2.4 percent to $1.495. Genesis gained 2.6 percent to $1.97. Contact Energy climbed 1.5 percent to $5.96. MightyRiverPower increased 0.4 percent to $2.59. Property For Industry rose 1.8 percent to $1.425. Kiwi Income Property Trust lifted 0.4 percent to $1.195. Infratil, the infrastructure investors, edged up 0.4 percent to $2.59.

"We had seen some selling off in those particular stocks because people were taking their money back out and chasing US dollar assets, and that yield trade is quite sensitive to dollar movements," said Paul Harrison director at Salt Funds Management. "The yield trade appears to be back on again."

Fletcher Building led the benchmark index higher, rising 3 percent to $8.87. The construction and building supplies company had come under selling pressure as its trans-Tasman counterparts had been sold off, Harrison said.

Xero, the cloud-based accounting software firm, fell 1 percent to $20.95. The company is targeting the US market for growth, and updated the market saying while it experienced 116 percent growth in annualised revenues in the states, they total $8.2 million and actual revenues in the six months to Sept. 30 total $3 million. Customer growth was 120 percent over the year, to total 22,000 the company's total global total of 371,000 customers. The Wellington-based company has snagged Andy Lark, an expatriate New Zealander with a heavy-hitting global career, to be its new chief marketing officer as it moves to strengthen its push into the US market.

"The numbers on the US that have come out are actually worse than the market expected," Harrison said.

Restaurant Brands New Zealand, which operates fast food chains through out the country, rose 2.9 percent to $3.52. Government figures out today showed kiwi spending on hospitality using their credit and debit cards increased 0.3 percent to $746 million in the month of September.

Kathmandu Holdings, the outdoor goods and apparel retailer, fell 0.7 percent to $2.93. Today's electronic cards figures also showed a 0.5 percent drop in September spending on apparel to $287 million.

Spark New Zealand, formerly Telecom Corp, fell 1.7 percent to $2.91.

Outside the benchmark index, ikeGPS Group, the makers of remote measuring devices, jumped 18 percent to $1 after it said it will beat its prospectus forecast and earn some contract revenue this year after it expanded a deal with US defence technology investor In-Q-Tel. The Wellington-based company will partner with IQT to further develop its smartphone measuring tool, Spike, for US intelligence and security forces, and will boost contract sales forecast in its June prospectus, chief executive Glenn Milnes told BusinessDesk. According to offer documents lodged with the companies office, ike expected no contract revenue this year, and $617,000 in 2016.

"I think that the market has over reacted in that stock," said Harrison. "It is good news for them, but I'm just not sure if it justifies the stock being up 18 percent."

Scott Technology rose 1.4 percent to $1.48. The industrial automation firm said full-year profit fell to $3.03 million from $5.1 million the year earlier.

(BusinessDesk)