MARKET CLOSE: NZX 50 rises to record; MRP, Meridian, Genesis climb

Monday 2nd March 2015

New Zealand shares rose to a fresh record, paced by MightyRiverPower, Meridian Energy and Genesis Energy as investors mulled possible lower interest rates across the Tasman. Diligent Board Member Services fell after reporting its annual profit.

The NZX 50 Index rose 14.201 points, or 0.2 percent, to 5892.673. Within the benchmark, 21 stocks rose, 19 fell and 10 were unchanged. Turnover was $159 million.

The local benchmark follow Australia's S&P/ASX 200 Index's 0.8 percent gain in afternoon trading. Investors are speculating the Reserve Bank of Australia will cut interest rates tomorrow, driving appetite for equities to deliver income in an already low interest rate environment.

Stocks which have a relatively high dividend yield, such as the partially privatised energy generators and retailers, rose. Meridian advanced 1.2 percent to $2.195. Genesis gained 0.5 percent to $2.25. MRP climbed 0.9 percent to $3.45. Spark New Zealand, formerly Telecom Corp, rose 0.6 percent to $3.29.

"We've really followed Australia higher today," said Grant Williamson, director at Hamiliton Hindin Greene. "There is the expectation, dare I say it, but the old interest rate argument again, that they're not going up any time soon."

Diligent was the worst performer on the day, dropping 2.8 percent to $5.95. The governance software developer has lifted annual profit 43 percent to US$8.59 million and reported sales at the top end of guidance as it continued to add new customers and announced plans to invest more heavily in research and development in the coming year.

"The comments around the stock were reasonably positive, but the stock has had a reasonable run up leading into its result, so it might be a case of people buying ahead of the announcement, and then profit takers coming out following the result," Williamson said.

Diligent is one of the last companies to report its financial statements this earnings season. All up Williamson said results had been "mixed", with the larger stocks dissapointing will mid-tier stocks improved.

"Some of our blue chip stocks didn't quite fire on all cylinders and missed the mark a wee bit with investors, including Spark, Flectcher Building and Contact Energy, although that was more a one off reaction to no higher dividend," Williamson said. "Our second line companies, they probably performed better, had better growth than what our large companies had, including the likes of Ebos, Nuplex, stocks like that did perform extremely well."

Ebos, the healthcare and animal care products company which is heading for record profit this year, advanced 0.3 percent to $10.35. Nuplex, the industrial rubber company, fell 0.3 percent to $3.22. Fletcher, the construction and building supplies firm, fell 0.1 percent to $8.63. Contact, the energy company which is planning to go offshore for growth, dropped 1.5 percent to $6.09.

BusinessDesk.co.nz

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