MARKET CLOSE: NZ shares outperform Australia as ANZ kicks off bank earnings

Wednesday 31st October 2018

New Zealand shares outperformed their Australian counterparts as Australia & New Zealand Banking Group kicked off reporting by the 'four pillars' of the banking sector.

The S&P/NZX index advanced 103.93 points, or 1.2 percent, to 8,752.31. Within the index, 35 stocks gained, nine fell and six were unchanged. Turnover was $167.4 million.

Asian stocks followed Wall Street higher, with New Zealand one of the stronger performers. Australia's S&P/ASX 200 index was largely flat in afternoon trading after ANZ was the first of three major banks posting annual reports. ASB Bank parent Commonwealth Bank of Australia is in a different reporting period, but today sold its Colonial First State Asset Management arm to Japan's Mitsubishi UFJ for A$4.1 billion. National Australia Bank and its Bank of New Zealand subsidiary report tomorrow.

Greg Smith, head of research at Fat Prophets, said Australia's banking sector has been under pressure from the Royal Commission into financial services. Investors want to see how lenders will improve earnings as Australia's property market slows, he said.

"It's all about simplification and reducing complexity and ANZ are ahead of the curve on that front," he said.

Dual-listed ANZ rose 1.8 percent to $28.04 on the NZX after reporting a 5 percent decline in group earnings. New Zealand was a highlight for the group with a 3 percent increase in earnings. The bank also canned plans for an initial public offering of UDC Finance. NZX fell 0.9 percent to $1.05.

Kathmandu Holdings led the market higher, up 4.3 percent to $2.68 on modest volumes. Disclosure notices showed First NZ Capital increased its stake in the outdoor equipment chain to 11.4 percent.

Synlait Milk rose 3.8 percent to $8.67 on average volumes as it recovers from a seven-month low. The milk processor is among the growth-focused companies sold off aggressively amid heightened volatility this month. A2 Milk Co, which has a substantial shareholding in its supplier Synlait, increased 2.5 percent to $10.42.

Air New Zealand rose 2.9 percent to $2.80 on average volumes after reporting an increase in passenger numbers.

Auckland International Airport rose 1.6 percent to $6.99 on higher than normal volumes after reaffirming guidance for a modest increase in annual earnings. The airport operator is in the process of a major infrastructure upgrade and a looming Commerce Commission report on whether it's extracting excessive profits will affect how it funds that expansion.

Smith said the country's strong tourism sector was supporting both companies.

Tourism Holdings gained 1 percent to $5 after the company said net profit will fall by as much as 15 percent as it invests in building a global business. The RV rental firm said it will maintain dividend payments, despite that falling outside policy.

Spark New Zealand was the most traded stock, with 5.3 million shares changing hands, about twice the average. The shares were unchanged at $3.95 ahead of its annual meeting on Friday.

Kiwi Property increased 0.4 percent to $1.315 on a volume of 3.3 million shares, more than twice its average. Vector gained 0.9 percent to $3.40 on volumes of 2.2 million shares, compared to its 90-day average of 287,000.

Among other companies with volumes of more than 1 million, Meridian Energy rose 0.8 percent to $3.135, and Z Energy increased 1.5 percent to $6.10 ahead of first-half earnings tomorrow. Precinct Properties New Zealand was unchanged at $1.41, Contact Energy advanced 1.3 percent to $5.59, Chorus was up 2.2 percent to $4.75 ahead of an annual meeting, and Mercury NZ rose 0.7 percent to $3.40.

Fletcher Building climbed 2 percent to $6.04 on higher than usual volumes after government figures showed building consents rose 5.4 percent in the year through September.

Fonterra Shareholders' Fund units decreased 0.2 percent to $4.87 after the milk processor's latest monthly update showed collection in the season to date was 5 percent more than a year earlier.

Outside the benchmark index, ikeGPS was unchanged at 62 cents after reporting a 26 percent increase in first-half revenue. Pyne Gould Corp fell 2 percent to 24 cents after minority shareholders voted to ditch its NZX listing and move to Guernsey.

Orion Health Group rose 4.7 percent to $1.11 after finalising its transaction with Hg, paving the way for a share buyback for investors.

(BusinessDesk)

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