New Zealand shares rose, led higher by Z Energy on lingering optimism over the transport fuels company's outlook and Precinct Properties New Zealand which is tapping the listed debt market. Tower hit a record low.
The S&P/NZX50 Index gained 31.57 points, or 0.4 per cent, to 8,008. Within the index, 23 stocks rose, 20 fell and seven were unchanged. Turnover was $284 million.
Z Energy led the index, up 3.5 per cent to $7.48. Last Thursday, the company reported it had lifted first-half profit 10 per cent as the acquisition of Chevron New Zealand's retail network swelled sales, and expects to pay bigger dividends under a new policy.
"All the analyst reports are out this week and that's given it a bit of a nudge," said Greg Easton, adviser at Craigs Investment Partners. "It was a good result and their forward-looking dividend and cash flow is quite attractive. It has been viewed as one of those stocks that are in danger of disruptive technology challenging its business model, so that has given some comfort."
Precinct Properties gained 2.3 per cent to $1.315. The listed commercial property investor is currently raising up to $100 million from a seven-year bond offer to repay bank debt.
"Anecdotally you hear stories of banks not having a lot of money to lend, they're struggling to get deposits. It makes sense for these companies to get funding from diverse sources, and they're not struggling to raise money on the bond market," Easton said.
"There is a lot of money out there looking for a home, and when term deposits are 3.5 per cent but you can get 4.5 per cent from essentially a mortgage over a property portfolio like that it's quite attractive."
Kiwi Property Group rose 0.4 per cent to $1.325. The company, which manages a $3 billion portfolio of shopping centres and office buildings, is selling its Majestic Centre office tower in Wellington to Investec Australia Property Fund for $123.2 million.
Contact Energy was the worst performer, down 3 per cent to $5.58, while Metro Performance Glass dropped 2.2 per cent to 90 cents, matching an all-time low, and Scales Corp fell 1.8 per cent to $3.85.
Outside the benchmark index Tower shares fell 7.9 per cent to 70 cents as investors weigh up whether the $70.8 million of new capital they're being asked to provide will provide enough of a buffer against lingering Canterbury earthquake claims that have repeatedly surprised the insurer.
The stock fell as low as 64 cents, the lowest since Tower listed in 1999, after the insurer announced plans to sell shares at 42 cents apiece in a fully underwritten one-for-one pro-rata renounceable entitlement offer. The funds raised will let Tower repay a $30 million loan from Bank of New Zealand and boost its surplus margin above the regulatory solvency capital.
Suncorp Group subsidiary Vero Insurance, which would have paid $1.40 a share to buy Tower had it not been blocked by the regulator, has committed to the capital raise.
Plexure Group gained 18 per cent to 13 cents. The mobile voucher firm, formerly called VMob, reported a narrower net loss in the first half to $195,000 as it lifted revenue to $5.4 million from $3.6 million and continued to streamline the business. The result was ahead of guidance.
Mercer Group was unchanged at 36 cents. The stainless steel fabricator said Fonterra Cooperative Group's final loss from the collapse of a silo it designed and supplied was $20 million.