New Zealand shares rise after Reserve Bank cuts rates

SkyCity Entertainment shares fell today.
SkyCity Entertainment shares fell today.

New Zealand shares rose after the Reserve Bank cut interest rates, underlining the yield from companies such as Spark NZ, while Kathmandu fell, snapping a five-day rally that had pushed the retailer to a 19-month high.

The NZX 50 Index rose 4.21 points, or 0.1 per cent, to 7353.82. Within the index, 21 stocks rose, 21 fell and nine were unchanged.

Turnover was $129 million.

Spark rose 2.8 per cent to $3.84 and has gained 36 per cent in the past 12 months, outpacing a 26 per cent gain in the NZX 50.

The stock offers a prospective dividend yield of 6.8 per cent based on Reuters data, more than twice the 3.2 per cent rate offered on a six-month term deposit.

"It's a pretty safe dividend now. It isn't encumbered by owning a network anymore," said Greg Easton, an adviser at Craigs Investment Partners. Still, "it's a very competitive space they are working in."

Easton said the Reserve Bank's quarter-point cut to the official cash rate today will "flow through to good, dependable dividend stocks". But the main focus is on the earnings season.

Vital Healthcare Property Trust rose 0.4 per cent to $2.27 after the Auckland-based hospital and healthcare property developer posted a 21 per cent gain in full-year profit as rental income rose and it recognised a gain in the value of its portfolio.

SkyCity Entertainment Group fell 0.8 per cent to $4.92, extending its decline yesterday when the hotel and casino group reported a 13 per cent gain in full-year profit to about $146 million.

Analysts at First NZ Capital had expected profit before one-time items of $156 million.

Wynyard Group tumbled 11 per cent to 42 cents after the crime-fighting and security software developer said it secured a $10 million revolving credit facility paying annual interest of 15 per cent with major shareholder Skipton Building Society which will help manage its "revenue timing risks".

Wellington Merchants, the company formerly known as cashed-up former retailer Kirkcaldie & Stains, rose 1.9 per cent to $3.28 after Ron Brierley's Mercantile NZ gave notice of a new takeover offer at $3.45 a share.

On June 1, the Merchants board lifted its estimated return to shareholders to a range of $3.50 to $3.60 a share, from a previous range of $2.99 to $3.49.

Kathmandu fell 3 per cent to $1.94. Last week, the retailer said its annual profit rose as much as 67 per cent on fatter margins.

Westpac Banking Corp fell 2.8 per cent to $31.85 and Australia & New Zealand Banking Group fell 2.1 per cent to $28.

New Zealand Refining declined 4.3 per cent to $2.45. Among other gainers, Trade Me Group climbed 2.2 per cent to $5.10 and Fletcher Building rose 1.3 per cent to $9.96.

- BusinessDesk

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