MARKET CLOSE: NZ shares rise; MRP, Genesis, Meridian gain on dividends
New Zealand shares rose, paced by Genesis Energy, Meridian Energy and MightyRiverPower as investors bet on a boost to dividend payouts by the state-controlled power companies. Xero climbed to a two-week high after acquiring a US payroll business.
The NZX 50 Index rose 1.456 points, or 0.03 percent, to 5403.61. Within the index, 27 stocks rose, 15 fell and eight were unchanged. Turnover was $119 million.
Investors bought government controlled power generators and retailers on speculation they will announce special dividend payouts. MRP advanced 1.2 percent to $2.875, after it announced a 5 cent per share dividend last night and detailed a revised dividend policy at its annual meeting today. Genesis rose 2.4 percent to $2.13. Meridian gained 2.2 percent to $1.665.
"All the gentailers are announcing special dividends at the moment," said Shane Solly, director at Harbour Asset Management. "That's driving people's thinking on gentailers. Stocks have anticipated some of this, this is a case where the market has seen the potential for increased dividends, but the fact they're announcing it now is a positive."
Contact Energy fell 0.9 percent to $6.33.
Xero gained 2.6 percent to a two-week high of $16.93. The cloud-based accounting firm paid the equivalent of $10 million in cash and shares for US online payroll company Monchilla to help drive its expansion in the world's largest economy. Integrating Monchilla with Xero provides better business-to-government connectivity and the opportunity to deliver electronic filing and payments of payroll taxes, with calculation support, across the US in 2015, the Wellington-based company said.
"Xero is having a bit of a jump," Solly said. "That's a piece of the equation in the US that they've been trying to solve."
The market is also conscious of the MSCI Index review tomorrow, Solly said, which may see Xero exit the global index and MRP or Meridian Energy join it. Investors who follow the index must hold a certain amount of the stocks which make up the index.
Stocks held for their reliable income were bought as investors looked for somewhere to park their cash in a low interest rate environment. Vital Healthcare climbed 3.3 percent to $1.57. Metlifecare rose 1.2 percent to $4.35. Ryman Healthcare gained 1.2 percent to $7.82. Argosy Property increased 1 percent to $1.065. Property For Industry advanced 0.7 percent to $1.48. DNZ Property Fund edged up 0.6 percent to $1.775.
"There is a lot of yield chasing going on, and it tends to support a number of New Zealand stocks," Solly said.
Z Energy fell 0.7 percent to $4.11. The service station chain, reported a 13 percent decline in first-half earnings to $91 million, missing its prospectus forecast of $105 million, after it made top-up payments to the Marsden oil refinery and booked a loss on a weaker New Zealand dollar.
Kathmandu Holdings, the outdoor goods retailer, fell 4.2 percent, or 13 cents, to $2.99 after shedding rights to its 9 cents per share interim dividend, which is payable on Nov. 21.
Fletcher Building, New Zealand's largest listed company, rose 0.6 percent to $8.50. Spark New Zealand, formerly Telecom Corp, fell 1.9 percent to $3.04.
Outside the benchmark index, ERoad rose 2.8 percent to a record close $4.15. The logistics and fleet management company said it complied with NZX listing rules, after NZX Regulation queried the stock's 58 cent gain to trade at $4.25 this morning from $3.67 on Oct. 29.