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MARKET CLOSE: NZ shares rise, Xero climbs on tech favour; Auckland Airport falls

20 Feb 2015

New Zealand shares rose paced by Xero and Diligent Board Member Services, as investors favoured technology-based stocks. Auckland International Airport slipped after reporting first-half profit growth of 1.3 percent.

The NZX 50 Index rose 22.723 points, or 0.4 percent, to 5748.948. Within the index, 23 stocks rose, 14 fell and 13 were unchanged. Turnover was $177 million.

Xero climbed 4.7 percent to $19.70, its highest since October. Since the start of the week the stock has advanced 24 percent. The cloud-based accounting software firm came under selling pressure last year, and saw its share price drop from a high of $45.99 in March to as low as $15 last October as investors mulled the outlook for growth, particularly in the US.

"The selling pressure has come off the stock somewhat because a large seller is out of the market and the stock exchange actually queried Xero on why their share price had bounced but they didn't have anything to say," said Grant Williamson, a director at Hamilton Hindin Greene. "Interest has come back into that stock and is flowing over into Orion Health and the technology stocks, which have come back into a little bit of favour amongst investors."

Diligent, the governance management app developer, advanced 2.9 percent to $6.12. Outside the benchmark index, Orion Health Group rose 7.1 percent to $5.14. The healthcare management software developer listed on the NZX last November, with an offer price of $5.70. SLI Systems, the online retail search engine firm, advanced 6.3 percent to $1.02. Wynyard Group, the security software firm, was unchanged at $2.09.

Auckland International Airport slipped 0.6 percent to $4.36. The country's major gateway raised its expectations for annual profit after first-half earnings rose 1.3 percent to $87.8 million on increased passenger numbers and higher revenue from its retail and property divisions.

"Auckland Airport had small increases across the board, which is pretty much what the market was expecting," Williamson said. "It's mainly single digit growth. Given the stock trades on relatively high fundamentals you would expect at least double digit growth, but it's just got such good earnings and assets that it continues to warrant that premium over most other stocks on the market."

Vector was unchanged at $2.91. The Auckland gas and electricity distribution company posted a 17 percent drop in first-half profit to $87.3 million as a gain in sales was offset by regulated price reductions, mark-to-market losses on derivatives and increased borrowing costs.

"Vector is obviously affected by the regulated pricing that the Commerce Commission has put on their transmission costs," Williamson said, but the result was in line with expectations.

Spark New Zealand, formerly Telecom Corp, rose 0.3 percent to $3.16. Fletcher Building, the construction and building firm, gained 1.4 percent to $8.45.

Guinness Peat Group fell 2.2 percent to 44 cents. Its UK threadmaker business, Coats, has agreed to sell its Europe, Middle East, and Asia crafts unit for US$10 million, which has been a drag on earnings over the past year.

Outside the NZX 50 Index, OceanaGold Corp advanced 1.9 percent to $2.75, after the gold and copper miner returned to annual profit of US$111.5 million, from an earlier annual loss of US$47.9 million after its Philippines mine beat production targets.

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