MARKET CLOSE: Shares rise; Kathmandu, Fletcher follow ASX higher

New Zealand shares rose, led by Kathmandu Holdings and Fletcher Building as investors bought sold-off trans-Tasman stocks. Fonterra Shareholders' Fund fell after dairy prices sank to their lowest level in 2015 overnight.

The NZX 50 Index gained 25.678 points, or 0.4 percent, to 5881.757. Within the index, 24 stocks rose, 19 fell and seven were unchanged. Turnover was $115 million.

Across the Tasman, Australia's S&P/ASX 200 Index rose 0.5 percent in afternoon trading, rebounding from yesterday's selling pressure when weak Chinese data weighed on the Australian market. Dual-listed companies rose. Kathmandu, the outdoor goods retailer, climbed 3.9 percent to $1.35. Fletcher, the building supplies and construction firm, advanced 2.3 percent to $8.49. Spark New Zealand, formerly Telecom Corp, rose 0.5 percent to $2.93.

"Those companies that have been beaten up in the last few weeks appear to be seeing a bit of renewed support," said Rickey Ward NZ equities manager at JB Were. There had been "understandable reasons for why you've got selling coming through, and they've regained a little bit of support given their falls. Then you've got the Australian side of things, it's not necessarily bottom dwelling, Fletcher Building is a very good barometer of Australia and its getting a bit of support and it had fallen pretty heavily over the last week as well."

Meridian Energy, the government-controlled power company, rose 1.3 percent to $1.945. The stock had been sold off as investors raised cash to fund the second installment payment for Meridian, due May 15, with a record date of May 4. It listed on the bourse in October 2013, with the shares offered in installment receipts to sweeten the offer, with $1 up-front and the promise of full entitlement to dividends, and the remaining 50 cents due next month.

"There is a little of defensive buying back in," Ward said. "Meridian's case is it's preparing for a further installment payment required."

Units of Fonterra Shareholders' Fund, which give holders access to Fonterra Cooperative Group's dividend stream, fell 1.9 percent to a record low close of $5.10. Dairy product prices fell in the latest GlobalDairyTrade auction overnight, hitting the lowest level in the 2015 auctions so far, as prices for milk powder and butter slid amid concern about the outlook for commodities. Last month, the world's largest dairy exporter posted a 16 percent drop in first-half profit, which it said reflected tough conditions in dairy, while also trimming its guidance for dividends to a range of between 20 cents and 30 cents, from a previous 25 cents to 35 cents.

"People are disenfranchised a bit with the company, given its recent profit downgrade and lack of communication with the market - a whole lot of things have combined just to make people increasingly nervous that it may well retain a $4.70 payout ratio, when all numbers point towards a lower one for farmers," Ward said.

Restaurant Brands rose 2.5 percent to $4.18. New Zealand's largest fast-food store operator posted a 19 percent gain in annual profit to $23.8 million and said it expects to boost earnings again this year even as labour costs rise. The retailer has restructured to improve margins and profitability including selling regional and lower-volume Pizza Hut stores to independent franchisees, closing unprofitable Starbucks Coffee outlets and adding burger chain Carl's Jr. to better compete with rivals McDonald's Restaurants (NZ) and Burger King Corp.

Tower rose 2.6 percent to $2.33 after the listed general insurer said its capital holdings are well in excess of the Reserve Bank's minimum solvency requirements, giving it room to buy back as much as $34 million of its stock.

(BusinessDesk)