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MARKET CLOSE: NZ shares rise led by A2, Spark rebounds

01 Apr 15

New Zealand shares rose, led by A2 Milk Co on its plans for US expansion. Spark New Zealand advanced as investors returned to yield-paying stocks.

The NZX 50 Index rose 1.598 points, or 0.03 percent, to 5835.583. Within the index, 14 stocks rose, 28 fell and eight were unchanged. Turnover was $125 million.

A2 advanced 3.6 percent to 58 cents extending yesterday's 12 percent gain. The milk marketing company debuted on the ASX yesterday and reiterated plans to launch in US from mid-April, in Californian supermarkets and natural products grocers. The company has budgeted US$20 million over the next three years for the new market.

"The market has responded positively to those announcements," said Mark Lister, head of private wealth research at Craigs Investment Partners. "Like any growth company pushing out into other jurisdictions people will watch and see if those plans actually translate into any progress when they next report."

Spark, formerly Telecom Corp, advanced 3 percent to $3.07 and has fallen 6.7 percent over the past month. Dividend paying equities, which have been pushed higher as investors seek income paying investments, came in for some selling last month as traders weighed the possibility of the US Federal Reserve raising interest rates in the world's largest economy sooner than expected.

"With interest rates where they are around the world, any time you see a bit of sell off in the income stocks it's just going to be a matter of time before you see buyers step in," Lister said. "A month ago people were expecting the Americans to potentially move interest rates as early as June, and now people have moved to see that as quite unlikely. I think that theme of good quality yield stocks will be with us for some time."

Xero fell 2.1 percent to $23.60, and has gained some 49 percent this year, in large part owing to US-based institutional shareholders investing $147.2 million of extra capital. Yesterday MYOB, the Australian rival to the cloud-based accounting software firm, confirmed plans it intends to join the ASX, as it looks to raise total proceeds of between A$831.7 million and A$833.8 million to pay down debt, offering shares between A$3 to A$4 apiece.

"It increases MYOB's profile being in the listed market and gives them more options for getting growth capital and so forth in the future," Lister said. "I would suspect Xero investors won't be particularly worried about MYOB."

Meridian declined 0.3 percent to $2.02. The partially privatised energy company listed on the bourse in October 2013, with the shares offered in instalment receipts to sweeten the offer, with $1 upfront and the promise of full entitlement to dividends, and the remaining 50 cents in May 2015.

"It's a little bit of short-term weakness in Meridian, as investors have to front up with the other bit of cash," Lister said. "The thing has doubled in price in the past 18 months, so people are sitting on some pretty big profits."

Diligent Board Member Services fell 0.2 percent to $5.39 after the governance software developer named former McKinsey partner Brian Stafford as its president and chief executive, replacing Alex Sodi.

Freightways, the logistics and courier business, was the worst performer on the benchmark index down 2.4 percent to $6.12. Kathmandu Holdings, the outdoor goods retailer, paced the decline falling 2.2 percent to $1.35. Orion Health Group, the healthcare software management service, fell 2.1 percent to $4.65.

Fletcher Building, the construction and building supplies firm, fell 0.4 percent to $8.39.

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