MARKET CLOSE: NZ shares rise on funds looking for better returns; Auckland Airport, Fletcher gain

New Zealand shares rose as continued demand for better returns from investors faced with local interest rates drove up leading companies including Auckland International Airport and Fletcher Building. A2 Milk fell as investors continued to sell a stock that reached a record high at the end of 2015.

The S&P/NZX 50 Index gained 12.92 points, or 0.2 percent, to 7,037.30. Within the index, 26 stocks rose, 18 fell and six were unchanged. Turnover was $178 million.

Auckland Airport, the biggest company on the bourse by market value, rose 2.6 percent to $6.42 and Fletcher Building, the nation's biggest construction and building products group, rose 1.8 percent to $8.91. Heartland Bank climbed 2.4 percent to $1.28 and Tower rose about 2 percent to $1.57.

"There's still a huge weight of money, people with term deposits rolling off and not happy with their re-investment options," said Greg Easton, an adviser at Craigs Investment Partners. "The differential between dividend rates and bond yields is still very high."

Easton said he doesn't expect the flow to abate any time soon, and may continue for the next 12 to 18 moths or even longer, given New Zealanders historically had a lot of money in term deposits and the banks.

Westpac Banking Corp rose 2.5 percent to $32.65 and Australia & New Zealand Banking Group edged up 0.04 percent to $26.68, as Australia's S&P/ASX 200 Index rose.

Ryman Healthcare rose 1.8 percent to $9.79 and Summerset Group gained 0.2 percent to $4.74, while Metlifecare slipped 0.3 percent to $5.89.

A2 Milk tumbled 9.1 percent to $1.40 and was the biggest decliner on the index.

"A2 and the health-related stocks have had a fantastic run but sentiment is changing, sometimes daily," Easton said. Some investors "are taking some money off the table because they have done so well."

NZX was unchanged at $1.02 after releasing its shareholder metrics for May, showing the volume of trades in the cash markets jumped 39 percent last month while the value of trading surged 46 percent from May last year to $4.3 billion.

Coats Group, the UK-based thread-maker left after diversified investor Guinness Peat Group sold its other assets, was unchanged at 61 cents after announcing it is buying an industrial yarns business and a software company servicing the apparel industry for as much as much as US$45 million including earnouts.

Synlait Milk rose about 1 percent to $3.08 after the Canterbury-based milk processor said it plans to pay farmer suppliers $4.50 per kilogram of milk solids for the 2016/17 season, up from $3.90/kgMS for the 2015/16 season and above Fonterra Cooperative Group's $4.25/kgMS forecast.

While Synlait was paying more than the market for milk, it was still low historically and as an input cost reduction that should flow through into high profits, Easton said.

The Fonterra Shareholders' Fund fell 2.3 percent to $5.57.

Among other stocks, Ebos Group fell 2.7 percent to $16.35, Air New Zealand declined 3.2 percent to $2.14 and Sky Network Television declined 3.9 percent to $4.47.

Steel & Tube Holdings fell 2.5 percent to $1.92.

(BusinessDesk)