MARKET CLOSE: NZ shares rise led by Summerset; Meridian, MRP gain

New Zealand shares rose, led by Summerset Group Holdings after it lifted annual sales 14 percent. Meridian Energy and MightyRiverPower paced gains as investors sought investments with high dividends. Trade Me Group fell after it said it bought a 15 percent stake in HarMoney.

The NZX 50 Index rose 24.961 points, or 0.4 percent, to 5609.802. Within the index, 22 stocks rose, 20 fell and eight were unchanged. Turnover was $77 million.

Summerset led the benchmark index higher, up 5.2 percent to $3.02, after the retirement village operator lifted sales to 458 while its fourth quarter new sales rose 88 percent to a record 113 as it opened four new villages in the second half of the year. Investors link rest home sales to the performance of the New Zealand housing market, which has picked up after a small lull in the lead up to September's general election, as would-be unit buyers take longer or choose not to sell their homes in a weak market.

"It was very strong new sales, but not such strong re-sales, which can be influenced by the availability of stock," said Matthew Goodson, managing director at Salt Funds Management. "This sector is really being driven by sentiment around the housing market - the sector and the stock were quite weak late last year, but there is some signs the housing market is bouncing back again post-election.

"It does remain vulnerable to any housing market correction, given the extreme heights of house prices," Goodson said.

Rival retirement operators were mixed. Metlifecare advanced 1.3 percent to $4.72. Ryman Healthcare was unchanged at $8.48, while outside the benchmark index Arvida Group, the latest retirement village operator to list on the bourse, was unchanged at 95 cents.

Yield stocks gained, as investors looked for income-paying investments in a globally low interest rate environment. Meridian, the state controlled power company, advanced 2.8 percent to $1.81. Fellow partially privatised energy generator MRP gained 1.9 percent to $3.15, while Genesis Energy fell 1.4 percent to $2.08.

"Particularly for Meridian and MightyRiver there has been a continuation of buying interest from people chasing the yield," Goodson said.

Trade Me dropped 3 percent to $3.62. The online auction site announced it paid $7.7 million for a 15 percent stake in HarMoney, the country's only licensed peer-to-peer lender.

"It appears to have valued that business at $51 million which appears a relatively full valuation for an early stage business. The key question for it, as always in New Zealand, is you can incur a lot of fixed costs running a business like this, and whether they can actually get the scale going to make it ultimately profitable," Goodson said.

Fletcher Building rose 2.2 percent to $8.39. Spark New Zealand, formerly Telecom Corp, gained 0.3 percent to $3.16.

(BusinessDesk)