MARKET CLOSE: NZ shares gain as Trade Me hits record on takeover

Wednesday 12th December 2018

New Zealand shares joined an Asia-wide rally on signs that China-US trade relations may be thawing, while Trade Me hit a record on news the board will back a private equity takeover.

The S&P/NZX 50 index climbed 67.42 points, or 0.8 percent, to 8,738.36. Within the index, 31 stocks gained, 13 fell and six were unchanged. Turnover was $132.2 million.

Trade Me led the market higher, up 3.1 percent to a record close $6.37, in heavier than usual trading with 2.6 million shares changing hands. The online marketplace's board agreed to support a $2.56 billion takeover by British private equity firm Apax Partners, which raised its bid to $6.45 a share. The transaction would be via a scheme of arrangement and will need shareholder, High Court, and Overseas Investment Office approval.

"A wee bit of a bounce today across a number of names, but Trade Me was obviously the driver," said James Lindsay, a senior portfolio manager at Nikko Asset Management. "It's a scheme of arrangement rather than a normal on-market bid which does have a lower threshold as well which is an interesting dynamic."

Restaurant Brands New Zealand, which is under a partial takeover offer, fell 0.4 percent to $8.47.

Stocks across Asia gained as investor confidence recovered on news that China plans to cut tariffs on US auto tariffs as the world's two biggest economies attempt to rebuild strained relationships. Australia's S&P/ASX 200 index was up 1.4 percent in afternoon trading and Hong Kong's Hang Seng was up 1.5 percent.

Lindsay said that progress on the trade tensions helped lift investor sentiment in a generally volatile environment.

"Equity and bond markets have reacted to the fact that it may not be all hunky-dory around the world," and there is talk of rate hikes in the US slowing down, he said.

Growth stocks benefited from the lift in sentiment, with Pushpay Holdings up 3.5 percent at $3.28 on very light volumes and A2 Milk rising 2.5 percent to $10.89 on less than half its average volume.

Fletcher Building increased 1.7 percent to $4.70 in smaller than usual activity. Australian fund manager Perpetual increased its stake in construction firm to 11 percent from 10 percent. The stock is coming off a 14-year low in November, and Lindsay said investors expect an announcement on the sale of the Formica international business in the coming weeks.

Spark New Zealand rose 1.3 percent to $4.33 in heavier trading than usual with 5 million shares traded compared to the 90-day average of 3 million. SkyCity Entertainment Group advanced 0.9 percent to $3.48 on a volume of 4.1 million, more than four times its average.

Of other companies that traded on volumes of more than 1 million, Kiwi Property Group increased 0.4 percent to $1.375, Contact Energy rose 0.9 percent to $5.92 and Meridian Energy gained 0.3 percent to $3.30.

Sky Network Television fell 3.3 percent to $2.06 in light trading and NZX declined 2 percent to $1 on heavier trading than usual.

Outside the benchmark index, Hallenstein Glasson dropped 6.7 percent to $4.06, a 10-month low. The retailer warned shareholders its margins may be squeezed in the second half on rising costs and unfavourable foreign exchange movements.

Rakon rose 1.7 percent to 30.5 cents after extending its banking facility by $6 million to help fund the anticipated increase in demand for the latest mobile telecommunications infrastructure.

(BusinessDesk)

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