MARKET CLOSE: Shares rise, paced by DNZ, MRP on yield demand

New Zealand shares rose, paced by DNZ Property Fund and MightyRiverPower, as investors sought income paying equities. Xero extended its decline.

The NZX 50 Index fell 4.296 points, or 0.1 percent, to 5769.652. Within the index, 23 stocks rose, 21 fell and six were unchanged. Turnover was $134 million.

Traders are looking towards Thursday morning, when the Reserve Bank is expected to keep the official cash rate on hold at 3.5 percent. Dividend paying stocks rose, as investors sought income-paying investments, such as property investors and listed-utility companies, in a globally low interest rate environment. DNZ advanced 2 percent to $2.02. MRP, the partially-privatise energy company, rose 0.5 percent to $3.005. Spark New Zealand, formerly Telecom Corp, gained 0.2 percent to $2.86.

"DNZ have been on a bit of a tear, and shot up a bit faster than others in that sector," Greg Easton, investment adviser at Craigs Investment Partners said. "There is still a real big hunt for yield going on. It's that hunt for yield, and there is talk to of the Reserve Bank actually lowering rates again, although they've ruled it out, that does push people towards yield as well.

Xero dropped 1 percent to a two-month low close of $20.65, the lowestlowest level since the cloud-based accounting software firm announced its $147.2 million capital raising in February. It widened its annual loss to $69.5 million, from $35.5 million a year earlier, while it also announced its US-based chief financial officer Douglas Jeffries has left the company after only two months in the role.

The share price has "now started to drift off, the momentum is certainly back on the down side," Grant Williamson, director at Hamilton Hindin Greene said. "The result we saw last week has done nothing to improve the share price in the short term. The CFO resignation as well, that doesn't help confidence in the stock."

Orion Health Group advanced 0.7 percent to $4.40 after 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, didn't provide earnings forecast in its prospectus because of the "lumpy" nature of the group's revenues for fear of misleading investors.

"It wasn't too bad," Craigs' Easton said. "It was good to see positive cash flow, but of course they said that cash flow will be up and down because of the timing of contracts."

SkyCity Entertainment Group, the casino operator, fell 2.6 percent to $4.07. The Northern Territory Government will impose a new levy on its Darwin and Alice Springs casinos of 10 percent of the gross profits of electronic gaming machines. SkyCity said it estimates it will cost about $6 million a year, and could reduce net profit by about $4 million.

Outside the benchmark index, SLI Systems dropped 11 percent percent to $1. The online retail search engine developer said revenue in the second half of its financial year will be less than expected because of a shortfall in American sales after it reorganised its sales team, and as it was impacted by a weaker Brazilian economy. Operating revenue will rise to $28 million in the year ending June 30, from $22 million a year earlier, the Christchurch-based company said in a statement.

On the New Zealand Alternative Index, Just Water International was unchanged at 15 cents after the water cooler and supplies business, which is 79 percent owned by founder Tony Falkenstein, got the greenlight for the sale of its Australian business for A$11 million, a transaction that will leave it debt free.

(BusinessDesk)