MARKET CLOSE: Shares rise on weaker Kiwi; Fletcher gains, Meridian drops

New Zealand shares rose as a weaker kiwi dollar attracted investors to stocks with currency exposure such as Fletcher Building and Fisher & Paykel Healthcare. Meridian Energy extended its fall from a record.

The NZX 50 Index increased 6.019 points, or 0.1 percent, to 5259.507. Within the index, 22 stocks rose, 19 fell and nine were unchanged. Turnover was a lighter-than-usual $80.7 million.

The kiwi dollar fell below 78 US cents for the first time in more than a year after the Reserve Bank published figures showing it intervened in foreign exchange markets in August, selling a net $521 million and confirming speculation based on jaw-boning rhetoric from the bank's governor, Graeme Wheeler. It traded at 77.45 US cents at 5pm in Wellington.

The currency has been at historically high levels this year, in part bolstered by Wheeler increasing the official cash rate 100 basis points to 3.5 percent since March, which has weighed on currency exposed companies, particularly exporters, income. Prime Minister John Key's comments that he'd prefer a weaker currency also weighed on the kiwi.

Fletcher, New Zealand's largest listed company, rose 0.3 percent to $8.78. The building and construction company is exposed to currency movements through its offshore businesses as well as in competition from imported building supplies. F&P Healthcare, which exports most of its breathing apparatus to the US, climbed 0.8 percent to $5.17.

"When you're selling your own currency you actually have unlimited firepower," said Matthew Goodson, managing director at Salt Funds Management. "Those currency sensitive stocks have really responded with the kiwi dollar continuing to fall away.

Among exporters outside the benchmark index, Scales Corp, the country's largest apple exporter, advanced 1.3 percent to $1.55, while Delegats, the wine exporters targeting the US market, was unchanged at $5.00 having advanced some 22 percent over the past three months, as the dollar has fallen from its July peak.

Energy generators and retailers gave up some of their recent gains. The stock prices rallied in the lead up to the election and just after its conclusion, as investors became more confident Prime Minister John Key and his National-led government would return for a third term, lifting the threat of regulation to the sector, which was a central policy plank for the opposition parties.

Meridian Energy was the worst performer on the benchmark index, falling 5.2 percent to $1.455 after closing at a record $1.525 last Thursday. TrustPower declined 0.7 percent to $7.30. Contact Energy fell 0.3 percent to $5.92. MightyRiverPower slipped 0.4 percent to $2.58. Genesis Energy was unchanged at $2.03.

"They had run quite strongly into the election," Goodson said. "When you really dig under the hood, to get the valuations much higher than here you actually need pretty strong assumptions for future electricity prices and for the margins they can charge over and above those wholesale prices to their retail customers."

NZX was unchanged at $1.25. The Financial Markets Authority today approved the stock market operator's new NXT market for high growth or "momentum" stocks, with the stock market operator expecting it to launch later this year.

Spark New Zealand, formerly Telecom Corp, rose 0.3 percent to $2.96. Auckland International Airport gained 1.2 percent to $3.84. Ryman Healthcare slipped 0.4 percent to $7.91.

Xero, the cloud-based accounting software company, led the benchmark index higher, up 1.7 percent to $21.00.

Outside the NZX 50, Pumpkin Patch, the second-worst performing stock on the NZX All Index the past 12 months, fell 4.7 percent to 41 cents. Last week, the childrenswear retailer announced an annual loss of $10.2 million in the year July 31, from a profit of $5.1 million previously, and signalled earnings are unlikely to improve for another year.

"There are some quite divergent views after their result," Goodson said. Pumpkin Patch "is quite high risk given its leverage, but by the same token it has made some significant positive changes at board and management level."

Turners Group NZ slipped 0.3 percent to $3.14. The independent directors of Turners, formerly Turners Auctions, are backing an $82 million bid from Dorchester Pacific to takeover the car auction firm for $3 a share, which is at the bottom of an independent adviser's valuation range. Dorchester was unchanged at 25.5 cents.

New Zealand Refining rose 1.3 percent to $1.62 after the country's only refinery operator said it had averted a potential strike, entering into talks with two unions which had threatened industrial action.

Units in Fonterra Shareholders' Fund rose 0.6 percent to $6.34 after Fonterra Cooperative Group announced plans to establish a new fund to attract capital from international investors as a tool to provide Australian and New Zealand farmers new equity for their own growth aspirations.

(BusinessDesk)