MARKET CLOSE: NZ shares rise; MRP, Genesis gain on Tiwai extension

Wednesday 1st July 2015

New Zealand shares rose, as Meridian Energy gained after an extension on Tiwai Point smelter renewed investor interest in utility companies. Kathmandu Holdings dropped as Briscoe Group detailed its takeover offer.

The S&P/NZX 50 Index rose 67.4 points, or 1.2 percent, to 5794.36. Within the benchmark index, 31 stocks rose, 11 fell and eight were unchanged. Turnover was $122 million.

Utility companies gained after Meridian Energy and Rio Tinto controlled New Zealand Aluminium Smelters have extended their electricity agreement for another month, giving the Tiwai Point smelter owner a little more time to sort out its electricity needs. The smelter consumes about a seventh of the nation's electricity, meaning its closure would flood the market with supply and potentially put thermal generation, which has higher marginal costs, under pressure.

Meridian increased 3.2 percent to $2.23. MightyRiverPower advanced 2.9 percent to $2.87. Contact Energy gained 1.2 percent to $5.07. Genesis Energy rose 2 percent to $1.775. Trustpower edged up 0.4 percent to $7.65.

"Investors have taken that as a positive that maybe the smelter is doing further negotiations, possibly with other electricity suppliers and maybe even Transpower," Grant Williamson, director at Hamilton Hindin Greene said. "That's brought renewed interest into all the electricity companies."

Kathmandu Holdings declined 1.1 percent to $1.73. Briscoe Group launched its full takeover of the outdoor equipment and goods retailer offering 89.7 million of its own shares and $32.3 million cash for the 80.1 percent of the chain it doesn't already own.

"Kathmandu has come down on the back of that mainly because a good proportion of the consideration is scrip rather than cash," Williamson said. "That's got investors thinking the offer is not quite as attractive as they were first thinking."

Blue chip stocks rose in an international relief rally, as fears about Greece defaulting on its debt and exiting the eurozone eased somewhat, Williamson said. Auckland International Airport rose 4.4 percent to $5.15. Sky Network Television gained 3.2 percent to $6.20. Chorus, the network lines operator, advanced 3.4 percent to $3.00. SkyCity Entertainment Group, the casino operator, rose 1.7 percent to $4.27.

"The Greek situation is ongoing but I think investors are coming to realise that it's not going to cause the end of the world whichever way Greece decides to go" Williamson said. "That certainly brought the bargain hunters back into the market."

A2 Milk Co led the benchmark index higher, up 5.6 percent to 75 cents. The milk marketing company is also in the midst of a possible takeover bid Freedom Foods, which already has a 19 percent interest in the milk marketing company.

Fletcher Building, the building supplies and construction firm, was unchanged at $8.12. Spark New Zealand, formerly Telecom Corp, fell 0.4 percent to $2.785.

BusinessDesk.co.nz

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