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MARKET CLOSE: NZ shares rise in thin trading, led by Xero; Infratil falls

New Zealand shares rose to a record close in light holiday trading, led by companies that have been sold off in recent months, including Xero and Nuplex Industries. Infratil declined after it announced plans to buy Australian retirement village operator RetireAustralia with the New Zealand Superannuation Fund.

The NZX 50 Index advanced 34.912 points, or 0.6 percent, to 5592.329. Within the index, 37 stocks gained, seven fell, and six were unchanged. Turnover was a lighter than usual $63.2 million.

Shares of Xero rose 4.2 percent to $16.25, leading the benchmark index higher. The software developer's share price peaked at $44.98 in March, but has since fallen off as investors question its ability to break into the US market. The stock has dropped 52 percent this year. Nuplex gained 2.8 percent to $2.92, having declined 16 percent this year, while Guinness Peat Group advanced 2.4 percent to 43 cents, and was down 29 percent this year.

"There's some reasonable movements, but on pretty small volumes," said James Lindsay, who helps manage about $400 million in equities at Nikko Asset Management in Auckland. "The big movers on the day have been under pressure."

Among other gainers were New Zealand Oil & Gas up 4 percent to 62 cents, A2 Milk Co, which rose 3.6 percent to 58 cents and Diligent Board Member Services, which advanced 2.8 percent to $5.14.

Infratil fell 0.7 percent to $3.01 after it announced plans to buy RetireAustralia for A$640.2 million with the NZ Super Fund as it looks to tap into the ageing demographic and underutilised sector across the Tasman. The price represents an earnings multiple of 18 times, which compares favourably to New Zealand operators, such as Metlifecare at 21.4 times, Summerset Holdings at 28 times and Ryman Healthcare at 35.4 times.

Nikko's Lindsay said Infratil manager HRL Morrison & Co has been building its expertise in the segment since it took a cornerstone stake in local retirement village operator Metlifecare, and wasn't a surprise that the firm was interested in the Australian market.

"The return dynamics are probably better in Australia than they are in New Zealand, even though they are pretty good here," he said.

Shares of Ryman increased 0.5 percent to $8.49, while Summerset gained 0.7 percent to $2.87 and Metlifecare rose 0.6 percent to $4.71.

Kathmandu Holdings fell 0.5 percent to $2.13 after the shares slumped last week when the outdoor equipment chain warned of slowing sales growth in Australia.

SkyCity Entertainment Group increased 0.3 percent to $3.79. The hotel and casino operator last week revised up the forecast cost of building an international convention centre in downtown Auckland by as much as $130 million.

Fletcher Building, the biggest listed company, declined 0.5 percent to $8.30 and Spark New Zealand rose 0.8 percent to $3.125.

DNZ Property Fund was the biggest decliner on the day, down 1 percent to $1.93.

Outside the benchmark index, Mowbray Collectibles was unchanged at 26 after the auction house secured financing from Bank of New Zealand for its Peter Webb Galleries unit.

Sealegs Corp dropped 17 percent to 10 cents, adding to its Christmas Eve decline when it was fined and censured by the New Zealand Markets Disciplinary Tribunal after failing to maintain the minimum number of independent directors on its board.