MARKET CLOSE: NZ shares gain as Liberal win in Australia boosts bank stocks

Tuesday 21st May 2019

New Zealand shares rose as Australian bank stocks were buoyed by the Liberal-National coalition's electoral win over the weekend, removing the threat of tax changes.

The S&P/NZX 50 Index increased 53.35 points, or 0.5 percent, to 10,234.15. Within the index, 28 stocks rose, 16 fell, and six were unchanged. Turnover was light at $77.2 million, with just three stocks trading on volumes of more than a million shares.

Dual-listed banks led the market higher, with Westpac Baking Corp up 9.1 percent at $29.25 and Australia & New Zealand Banking Group rising 7.7 percent to $29.35. AMP rose 3.9 percent $2.40. The Australian lenders were under pressure from the prospect of a Labor government, which wanted to remove franking credits on dividends and limit negative gearing to new investment properties.

"Investors are very much in favour of their franking credits," said Grant Davies, an investment adviser at Hamilton Hindin Greene. "New Zealand investors are going to have exposure over there."

Of companies with large Australian exposures, Fletcher Building rose 2 percent to $5.20, Heartland Group Holdings increased 1.3 percent to $1.60 and SkyCity Entertainment Group advanced 0.8 percent to $3.88.

Spark New Zealand was the most traded stock on a smaller volume than normal of 3.1 million shares. It rose 1.5 percent to $3.81.

Kiwi Property Group increased 0.3 percent to $1.54 on a volume of 1.2 million shares, after reporting a 15 percent increase in annual profit, due largely to revaluation gains.

Meridian Energy rose 1 percent to $4.365 on a volume of 1.2 million shares.

Scales Corp posted the biggest decline on the day, down 2.5 percent at $4.99 after flagging its new business structure may lift annual earnings by up to 13 percent.

Davies said the stock has been performing well, and while it signalled higher underlying profit, the outlook for earnings before interest, tax, depreciation and amortisation was below analysts' expectations.

NZX declined 1.8 percent to $1.07 after the announcement of the first initial public offering in two years. Medicinal cannabis firm Cannasouth plans to raise up to $10 million and list on the main board next month.

Outside the benchmark index, Steel & Tube Holdings sank 13 percent to $1.07 after downgrading its earnings outlook due to tighter margins. The downgrade was accentuated by the restatement of year-earlier normalised earnings which gave the firm a lower starting point. Almost 1.1 million shares changed hands today, the most since mid-October.

Davies said it was another poor update from the company, and that it will be interesting to see whether they're able to turn things around.

Fellow building products firm Metro Performance Glass, which reports annual earnings on Thursday, fell 2.5 percent to 39.5 cents.

Of firms reporting tomorrow, general insurer Tower was unchanged at 78 cents and mobile advertising firm Plexure Group rose 3.9 percent to 54 cents.

Northport shareholder Marsden Maritime Holdings was unchanged at $5.32. The government received a business case on upgrading the Northland rail line that could bring forward Northport's development as a major freight handler. Port of Tauranga was unchanged at $6.06.

Bank of New Zealand's 2023 bonds paying annual interest of 4.1 percent were the most traded debt security. The notes closed at a yield of 2.4 percent, down 6 basis points, on a volume of 583,000.

(BusinessDesk)

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