MARKET CLOSE: Shares rise; Meridian, SkyCity gain

New Zealand shares rose, paced by SkyCity Entertainment Group and Meridian Energy as investors mulled a possible rate cut. Heartland New Zealand advanced as the market digested last week's block offer in the stock. Spark New Zealand fell as investors mulled its earnings outlook.

The NZX 50 Index rose 12.598 points, or 0.2 percent, to 5747.953. Within the index, 28 stocks rose, 15 fell and seven were unchanged. Turnover was $94.3 million.

The market is pricing in a 46 percent chance the Reserve Bank will reduce interest rates at its Monetary Policy Statement on June 11, after the central bank signalled in late April that interest rate hikes were off the table and it was watching conditions that could prompt a cut. Traders bought equities with stable dividends as they sought income-paying investments in a low interest rate environment.

SkyCity, the casino operator, advanced 1.7 percent to $4.15. Meridian, the government-controlled energy generator and retailer, gained 1.5 percent to $2.435. Fletcher Building, the construction and building supplies firm, rose 0.1 percent to $8.50. Freightways, the courier and logistics service, climbed 1.5 percent to $6.19. Air New Zealand, the national carrier, rose 1.1 percent to $2.81.

"The outlook for interest rates still looks to be down so that could add fuel to the fire eventually but at the moment investors seem to just be sitting on their hands," said Grant Williamson, director at Hamilton Hindin Greene, who said New Zealand's relatively high-yielding bourse was supporting the market in quiet trading. "There's no real catalyst at the moment to buy stocks. Investors seem to be a little bit reluctant to hop in and buy at the moment."

Heartland rose 0.8 percent to $1.34. Last week the listed bank saw nearly 9 percent of its stock traded after Quadrant Private Equity put in a block order for its holding, via brokerage First NZ Capital offering the shares at $1.30.

"There is still quite solid demand for that stock today," Williamson said. "The market liked that block sale was digested very quickly by the market."

Spark, formerly Telecom Corp, fell 0.7 percent to $1.39. 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.

"Analysts may have pegged back future prospects and investors are starting to wonder where the earnings growth is going to come from with Spark," Williamson said. "The income investors were buying the stock pretty aggressively but not investors are starting to consider where growth is going to come from."

Coats Group, formerly the Guinness Peat Group, rose 3.8 percent to 55 cents.

Australia and New Zealand Banking Group, the dual-listed Australian bank, was the worst performer on the benchmark index down 1.1 percent to $34.11.

(BusinessDesk)