MARKET CLOSE: NZ shares gain as Fletcher, MSCI review in focus; Trade Me rises

Wednesday 18th April 2018

New Zealand shares gained in light trading as Fletcher Building's discounted rights issue and upcoming MSCI New Zealand index review weighed on investors' minds. Trade Me and Metlifecare increased while Comvita dropped.

The S&P/NZX 50 index rose 24.97 points, or 0.3 percent, to 8,369.49. Within the index, 21 stocks gained, 22 fell, and seven were unchanged. Turnover was $85 million, extending yesterday's lacklustre activity.

Fletcher Building remained in a trading halt at $6.27 as investors continue to digest yesterday's underwritten $750 million rights issue at a 23 percent discount. After the close of trading, the company said institutional investors took up 98 percent of their entitlements, raising gross proceeds of $500 million. The institutional bookbuild opens tonight and runs until the close of business tomorrow before trading resumes on Friday.

The capital raise is part of a $1.25 billion refinancing plan shoring up the construction company’s balance sheet having drawn $280 million from its banking facility in the first three months of this year alone. Fletcher also announced plans to sell Formica and its steel roofing tiles business, which Morningstar Research estimates are worth about $700 million.

"There are a lot of facets in that stock - it is difficult to read with clarity where it will go," said James Lindsay, a senior portfolio manager at Nikko Asset Management.

Fletcher's rights issue also raised uncertainties about the outcome for the MSCI index review, which Lindsay said was also weighing on activity. Mercury NZ is the smallest member of that index, and declined 1.4 percent to $3.205 today.

Despite that uncertainty, New Zealand stocks followed Asia higher, led by Trade Me, which rose 2.3 percent to $4.39. Metlifecare gained 2.3 percent to $5.83 and Pushpay Holdings advanced 1.8 percent to $3.98.

Kathmandu Holdings declined 0.8 percent to $2.54 after the outdoor equipment chain said it would accept $2 million of oversubscriptions in its share purchase plan, raising $50 million to help fund the purchase of US footwear supplier Oboz Footwear. Briscoe Group, which owns about 19 percent of the stock, fell 0.3 percent to $3.50.

Comvita posted the biggest decline on the index, falling 4.1 percent to $6.60. First NZ Capital cut its target price in the stock to $7.15 from $7.53 after the latest earnings downgrade, citing heightened risks over the honey products maker's production base.

Fonterra Shareholders' Fund units fell 0.2 percent to $5.74 after dairy prices rose at the latest Global Dairy Trade auction. The fund offers investors exposure to Fonterra Cooperative Group's earnings, which treat farmgate milk prices as input costs. Rival processor Synlait Milk rose 0.2 percent to $9.58, and milk marketer A2 Milk Co gained 1.3 percent $12.35.

Sky Network Television fell 2.5 percent to $2.32, NZX dropped 1.8 percent to $1.08 and Scales Corp declined 2.2 percent to $4.40.

Auckland International Airport rose 1.2 percent to $6.29, Meridian Energy was unchanged at $2.87 and Spark New Zealand advanced 0.3 percent to $3.435.

Outside the benchmark index, NZME was unchanged at 84 cents after the media group appointed former ASB Bank chief Barbara Chapman to its board.

(BusinessDesk)

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