MARKET CLOSE: NZ shares rise as RBA rate cut stokes demand for yield
New Zealand shares gained after the Reserve Bank of Australia cut its cash rate to a record low, making the returns on offer in New Zealand more attractive. Stocks with relatively high dividend yields led gainers, including Meridian Energy, Contact Energy and Genesis Energy.
The NZX rose 25.259 points, or 0.4 percent to 5781.946. Within the index, 27 stocks advanced, 16 fell, and seven were unchanged. Turnover was $110.6 million.
The RBA cut Australia's target cash rate a quarter-point to 2.25 percent, increasing New Zealand's yield advantage over its neighbour. The yield on New Zealand's benchmark 10-year government bond was 3.16 percent at 5pm in Wellington, compared to 2.305 percent on its Australian equivalent.
Electricity generator and retailer Meridian Energy led gainers on the NZX, rising 2.6 percent to $1.99. Other power companies, which are often held for the reliable income stream, also gained, with Contact up 2.5 percent to $7.30, and Genesis advancing 2 percent to $2.29.
"There's huge demand for New Zealand yield because it looks so attractive relatively speaking, and that's even more so with the RBA cutting," said James Lindsay, who helps manage $400 million in equities at Nikko Asset Management. "Yield is involved in a number of gainers today."
Exploration firm New Zealand Oil & Gas rose 0.8 percent to 64.5 cents after global oil prices continued to rebound from lows reached last month. Petrol station chain Z Energy, which benefits from a cheaper oil price, fell 1 percent to $4.96.
Xero gained 1.3 percent to $16.20, adding to yesterday's 2.3 percent increase when the cloud-based accounting software developer said customer sales were up 79 percent in the first nine months of its financial year.
Biotech company Pacific Edge was the biggest decliner, falling 3.8 percent to 76 cents.
Sky Network Television dropped 2.7 percent to $5.78, extending its decline after the pay-TV operator yesterday announced online packages for customers to buy certain sports without having to sign up to the company's bundle deal.
Lindsay said Sky TV is getting more in line with web-based offerings from incoming rivals, though the prices being offered aren't cheap enough to encourage a wholesale shift away from its bundle package.
Outdoor equipment chain Kathmandu Holdings fell 0.7 percent to $1.46, adding to its 27 percent slump yesterday when it warned it will post a first-half loss after disappointing trading during December and January. Fund manager Tribeca Investment Partners cut its stake in Kathmandu to 3.6 percent from 5.7 percent, according to a substantial shareholder notice released today.
Fletcher Building, the biggest company on the local stock exchange, increased 0.2 percent to $8.47. Spark New Zealand rose 0.9 percent to $3.37.
Outside the benchmark, Intueri Education Group was unchanged at $2.90 after the private training college said it has agreed to buy an IT training institute for $1.2 million.
Fund manager and property investor Augusta Capital rose 4 percent, or 4 cents, to $1.05 after shedding rights to its 1.25 cents per share interim dividend, payable on Feb. 13. Scott Technology, which designs and builds production lines for manufacturers, advanced 0.7 percent, or 1 cent, to $1.53 after it shed the right to its 1 cent per share interim dividend, payable on Feb. 13.