MARKET CLOSE: NZ shares gain as defensive stocks find favour; Contact, Meridian rise

Tuesday 11th December 2018

New Zealand shares rose, led by Contact Energy and Meridian Energy as heightened uncertainty in global markets bolsters the attraction of defensive stocks offering stable dividends.

The S&P/NZX 50 index increased 10.92 points, or 0.1 percent, to 8,670.94. Within the index, 19 gained, 26 fell, and five were unchanged. Turnover was $124.9 million.

Asian stock markets were mixed with Hong Kong's Hang Seng down 0.1 percent and Australia's S&P/ASX 200 index gaining 0.2 percent in afternoon trading as investors weigh up the impact of heightened trade tensions between the US and China and Britain's delayed Brexit vote in the face of widespread opposition.

Rickey Ward, NZ equity manager at JBWere, said that environment of uncertainty makes New Zealand's share market relatively attractive given the prevalence of defensive stocks such as the generator-retail power companies, property investors, and utilities.

"People have said they want to get out of growth and go defensive again and lo and behold, the New Zealand market is pretty attractive and things are looking pretty good again," he said.

"If we look at the market today and the volumes traded, they are in those defensive markets - the property sector, the generators the Spark's of this world, the utliity companies."

Contact led the market higher, up 3 percent at $5.87 on a slightly bigger than usual volume of 981,000. Meridian gained 2.2 percent to $3.29 on 2.6 million shares, about twice its average volume, and Genesis Energy increased 0.8 percent to $2.53 on a volume of 1.2 million. Goodman Property Trust rose 0.3 percent to $1.57 on 1.3 million shares.

Spark New Zealand was up 0.1 percent at $4.275 on a volume of 3.4 million, the busiest stock on the index. SkyCity Entertainment Group fell 1.7 percent to $3.45 on a volume of 2.8 million, compared to its 90-day average of 704,000.

Of other companies trading on volumes of more than 1 million, Auckland International Airport fell 2 percent to $6.96 and Z Energy decreased 0.2 percent to $5.67.

Restaurant Brands New Zealand rose 2.5 percent to $8.50 in slightly busier activity of 309,000. The fast food operator's board today said they will back a partial takeover bid from Mexico's Finaccess Capital at $9.45 for 75 three quarters of the company. An independent valuation by Grant Samuel put a price of $8.15-$8.92 a share.

Scales Corp fell 2.5 percent to $4.24 on twice its average trading volume at 122,000.

Arvida Group decreased 1.5 percent, or 2 cents, to $1.28 after shedding rights to a 1.3 cents per share dividend.

Vital Healthcare Property Trust fell 1.4 percent to $2.05. The real estate investor's manager has hired a firm to lobby for investor votes ahead of the Dec. 20 annual meeting, where rebel shareholders are seeking to change the terms of the management contract and install a director to its board.

Outside the benchmark index, PGG Wrightson fell 3.8 percent to a 23-month low 51 cents. Overnight, its cornerstone shareholder Agria settled with the US Securities and Exchange Commission over claims of fraudulent accounting, and executive chair Alan Lai, who chaired Wrightson, also reached a settlement over market manipulation claims.

NZAX-listed BurgerFuel Worldwide was unchanged at 68 cents after saying it's hired KPMG to undertake a strategic review of the business. The burger franchisor has found global expansion risker and more expensive since losing its partner, Franchise Brands.

(BusinessDesk)

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