MARKET CLOSE: NZ shares rise led by Pacific Edge, Kiwi Property
New Zealand shares rose, paced by Property For Industry, Kiwi Property Group and Goodman Property Trust as investor appetite for yield returned. Pacific Edge led the benchmark index higher after it secured further patents.
The NZX 50 Index rose 11.972 points, or 0.2 points, to 5871.376. Within the index, 22 stocks rose, 21 fell and seven were unchanged. Turnover was $431 million, of which Spark New Zealand made up $128 million while Fletcher Building had $60 million worth of shares change hands.
Earlier this week the US Federal Open Market Committee lowered its outlook for growth, inflation and interest rates, offsetting the impact of removing the key word 'patient' from its statement which signals it is prepared to raise rates based on future economic data. The more dovish statement prompted investors to seek yield paying equities in the face of lower interest rates for longer.
Yield stocks, like utility companies and property investors, gained. Kiwi Property advanced 3.2 percent to $1.30. Goodman Property rose 1.3 percent to $1.155. Property For Industry increased 2.6 percent to $1.60. Meridian Energy gained 0.7 percent to $2.09. Argosy Property rose 2.7 percent to $1.13. Genesis Energy advanced 0.9 percent to $2.35.
"With the Fed still not committing to an interest rate rise it gave the market a bit of a boost," said Robert Garden, an investment advisor at Craigs Investment Partners. "The world is focused on the hunt for yield."
Pacific Edge led the benchmark index higher, rising 4.5 percent to 70 cents. Earlier this week, the Dunedin-based biotech firm was awarded a patent filed in Japan as part of its technology targeted to detect stomach cancer. The same technology has previously been patented in New Zealand, Australia, China and Europe. The company is also on a roadshow in Australia to lure investors, Garden said.
"It looks like management were doing a bit of presentation to institutions in Australia," Garden said. "They're still building the number of patents that they have got. It's a stock that's lost a wee bit of interest and a bit more news flow has probably focused attention on it."
Spark, formerly Telecom Corp, fell 0.3 percent to $3.07. Fletcher, the construction and building supplies firm, was unchanged at $8.93.
Pumpkin Patch advanced 33 percent to 28 cents. The struggling children's clothing retailer is seeking formal proposals after receiving approaches to buy or refinance the company, having signalled in November that it was at risk of breaching its banking covenant. First-half profit increased to $749,000 from $106,000 in the year earlier period as sales rose 2.2 percent to $121.9 million.
"It still has a name that everyone recognises, so there is potentially some value in it," Garden said.