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MARKET CLOSE: Shares rise as yield hunters return; Genesis, Vector gain

Suze Metherell
Fri, 17 Oct 2014

New Zealand shares rose, paced by Genesis Energy and Vector as investors hunted yield. SkyCity Entertainment Group led the benchmark higher, buoyed by a strong first quarter.

The NZX 50 Index rose 14.922 points, or 0.3 percent, to 5146.942. Within the index, 26 stocks rose, 16 fell and eight were unchanged. Turnover was $130 million.

In recent weeks, overseas markets have been volatile, with the CBOE VIX Index, known as the fear gauge, spiking to its highest level since 2012 this week, as investors fretted global economic growth may stall. New Zealand stocks have been partly insulated by the relatively high-yielding local bourse and the current low interest rates, which makes dividend paying stocks an attractive investment option.

Power companies, which offer a consistent income, rose. Genesis Energy, which was partially privatised by the government in April, advanced 2.4 percent to $1.94. Fellow state controlled energy companies such as MightyRiverPower increased 0.4 percent to $2.66 while Meridian Energy rose 0.6 percent to $1.565. Vector, the Auckland lines company, climbed 1.9 percent to $2.63.

Property investment companies, held for their regular dividend payment, also gained. Argosy Property rose 1.5 percent to $1.04. Property For Industry increased 0.7 percent to $1.415. Goodman Property Trust advanced 0.5 percent to $1.085.

"Our market is, particularly since the addition of the partially privatised energy companies, a relatively defensive market," said James Smalley, a director at Hamilton Hindin Greene. "That we're still at an interest rate level considered stimulatory means that some stocks still present good value for those income investors."

SkyCity, the Auckland-based casino operator, was the day's best performer on the benchmark index, rising 2.9 percent to $3.57. At the company's annual general meeting today it said first quarter revenues were showing good momentum, up 6 percent on the first quarter of the previous financial year, despite continued construction disruption in Adelaide. The biggest growth has come in the high rollers from South East Asia, with a 55 per cent increase in international business to $2.2 billion.

Xero, the cloud-based accounting software firm, rose 0.5 percent to $17.05. The stock has dropped 20 percent in the past month, as investors have questioned the Wellington-based company's pace of growth in the US. It wants a million customers worldwide, and is targeting growth in the US market where so it has some 22,000 of its total 371,000 customers.

"For a number of investors that rise will be some relief given its fall," Smalley said. "That could be the worst of the selling in the stock over - that precipitous fall may be over."

Spark New Zealand, formerly Telecom Corp, rose 0.2 percent to $2.885. Fletcher Building, New Zealand's largest listed company, fell 0.8 percent to $8.48.

Outside the benchmark index, Dorchester Pacific was unchanged at 25 cents, while Turners Group, formerly Turners Auctions, was unchanged at $2.96. Turners paid its special 15 cent per share dividend, an incentive payment to shareholders to accept the Dorchester $3 per share takeover bid. The finance company holds 86.8 percent of Turners shares, and said the offer will go unconditional once the dividend is paid.


Suze Metherell
Fri, 17 Oct 2014
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MARKET CLOSE: Shares rise as yield hunters return; Genesis, Vector gain