MARKET CLOSE: Shares rise; Meridian gains, Spark falls

New Zealand shares rose, paced by Meridian Energy and Contact Energy as investors bought into income-paying stocks. Spark New Zealand extended its decline as traders weighed its earnings outlook.

The NZX 50 Index rose 5.528 points, or 0.1 percent, to 5751.759. Within the index, 28 stocks rose, 19 fell and three were unchanged. Turnover was $129.5 million.

The Reserve Bank announced new lending restrictions it will use to target Auckland property investors as it looks to take the heat out of the property market in the country's biggest city. Lower than expected inflation has the central bank weighing a possible rate cut, without further stoking the housing market, with traders now pricing in a 44 percent chance it will cut rates at its monetary policy meeting next month.

The prospect of lower interest rates saw investors seek dividend-paying equities. Meridian climbed 0.6 percent to $2.375. Contact gained 1.1 percent to $5.61. Argosy Property Group rose 0.5 percent to $1.12. Kiwi Property Group increased 0.4 percent to $1.29. Property For Industry advanced 0.3 percent to $1.575.

"It does indicate that they still have the intention of dropping interest rates, in light of inflation being next to zero and they're wanting to keep the general economic growth stimulated there," said Robert Garden, investment adviser at Craigs Investment Partners. "It's a bit of a balancing act - they don't want to go and stoke the Auckland property market so introducing those new macro-prudential tools there. The yield players are going to keep seeing support. There's still a lot of interest there that is going to keep them reasonably well-supported."

Spark fell 0.4 percent to $2.86. The telecommunications provider is in the middle of a business transformation away from its bread-and-butter landline income to become a data, cloud and content provider, launching a streaming video service, Lightbox, to compete.

"It has come off $3.50 at the beginning of February," Garden said. "There's a bit more awareness of the competitive sector it is in now, now that Chorus isn't a part of it."

Orion Health Group jumped 6.2 percent to $4.62. Last month the healthcare management software developer posted a 7 percent increase in annual operating revenue to $164 million as growth in the Asia Pacific, Europe and Middle East regions made up for a slowdown in North America. The company, which listed on the bourse last November offering shares at $5.70 a piece, didn't provide earnings forecast in its prospectus because of the "lumpy" nature of the group's revenues for fear of misleading investors.

Heartland New Zealand, the bank, was the worst performer on the benchmark index today, dropping 2.2 percent to $1.31.

Fletcher Building, the construction and building supplies firm, fell 0.4 percent to $8.62.

(BusinessDesk)