MARKET CLOSE: NZX50 rises to record; MRP, Meridian, Genesis gain

New Zealand shares rose to a record paced by MightyRiverPower, Genesis Energy and Meridian Energy as the prospect of lower interest rates for longer lured investors to stocks with regular dividends. Fletcher Building gained.

The NZX 50 Index advanced 39.636 points, or 0.7 percent, to a record close of 5672.852. Within the index, 26 stocks rose, 19 fell and five were unchanged. Turnover was $123 million.

New Zealand consumer prices fell in the December quarter as a drop in international oil prices pushed down the local cost of fuel, government data showed. That fuelled market speculation the Reserve Bank will keep the official cash rate on hold at 3.5 percent, and encouraged investors wanting steady income to seek high-yielding equities.

Government-controlled energy companies, which offer investors a reliable dividend income, gained. MRP climbed 2.6 percent to a record close of $3.42. Meridian rose 2.1 percent to $1.92, matching its record high earlier this month. Genesis advanced 2.9 percent to $2.16.

"The New Zealand market has a huge demand from offshore for New Zealand yield assets and that's been driving those big movers," said James Lindsay, who helps manage about $400 million in equities for Nikko Asset Management. "We've seen Westpac saying they think the OCR will remain 3.5 percent to June 2016, and it's those headlines which drive people to seek out yield investments as well."

Fletcher, the construction and building supplies firm, advanced 4.5 percent to $8.42 and paring a decline in recent months.

"Fletcher Building had been a bit weaker over the last few days," Lindsay said. International demand for New Zealand assets was attracting investors to relatively cheap stocks, he said.

Warehouse Group, New Zealand's largest listed retailer which has declined 16 percent since the start of the year, rose 3.4 percent to $2.71. Kathmandu Holdings, the outdoor goods chain which has dropped 8.8 percent since the start of the year, climbed 2 percent to $2.01.

Pacific Edge led the benchmark index higher, jumping 8.1 percent to 80 cents, albeit on thin volume.

Spark New Zealand, formerly Telecom Corp which has advanced 7.2 percent since the start of the year, fell 2 percent to $3.275, the highest since August last year.

"Spark has performed very well itself and it's trading above what a number of analysts believe is a fair value for it," Lindsay said.

Other stocks which have gained since the start of the year fell today. Property For Industry, which has gained 4.3 percent since the year began, declined 1.9 percent to $1.55. Summerset Group Holdings, the retirement village operator which has advanced 13 percent since the start of the year, dropped 2.6 percent to $3.06.

Outside the benchmark index, Turners & Growers, the fruit marketer majority owned by Germany's BayWa, rose 2.6 percent to $2 after it said it expects its pre-tax annual profit to rise as much as 20 percent higher than the $23.4 million reported in 2013.

(BusinessDesk)