Fletcher Building drives index higher

Fletcher Building shares rose 1.7 per cent yesterday to close at $8.97. Photo / File

Heat comes off high flying powercos as investors look for value in under-performing stocks with potential.

New Zealand shares rose yesterday, paced by Fletcher Building, as investors were drawn to firms that have under-performed the benchmark index while eschewing those that led its recent rallies, including Meridian Energy and Mighty River Power.

The NZX 50 Index rose 2.81 points, or 0.04 per cent, to 5911.40. Within the index, 27 stocks rose, 14 fell and nine were unchanged. Turnover was $121 million.

Fletcher Building rose 1.7 per cent to $8.97. The nation's biggest construction and building products company has fallen 6.4 per cent in the past 12 months while the NZX 50 gained 16 per cent.

Meridian Energy fell 1.6 per cent to $2.13, having soared 101 per cent in the past 12 months, while Mighty River Power fell 2.8 per cent to $3.255, denting a 12-month gain of 63 per cent. Chorus, the network company, rose 0.9 per cent to $2.94 and has advanced 76 per cent in the past 12 months.

"Fletcher Building has been an under-performer," said Grant Williamson, a director at Hamilton Hindin Greene. "Maybe investors think it has got good upside potential."

He said Meridian was likely to decline as the May deadline loomed for the second payment on its instalment receipts "as people sell down to pay the balance or decide to take profits".

Fonterra Shareholders' Fund units rose 1 per cent to $5.89 after the world's largest dairy exporter said it had acquired 18.8 per cent of Shenzen-listed Beingmate Baby & Child Food to cement a partnership that will sell infant formula into China.

"Investors view that as extremely positive for Fonterra in the bigger picture," Williamson said. "That they're tying up with a very large Chinese manufacturer is a pretty strategic investment for them."

Williamson said overall, investors want to see further earnings gains to help drive the benchmark index higher from already-historic levels.

"In the New Zealand market, earnings do need to show some good, solid improvement to warrant these higher share prices - investors are comfortable that this is going to happen," he said.

Tower rose 2.2 per cent to $2.36 after the insurer said it doesn't expect to be affected by Cyclone Pam in the Pacific Islands.

A2 Milk Co advanced 1.9 per cent to 55c. The milk marketing company is chasing a dual-listing across the Tasman and has issued an information memorandum to would-be investors after gaining preliminary approval to list on the Australian stock exchange.

On the New Zealand Alternative Index, Pushpay Holdings rose 5.6 per cent to $3.80. The mobile payment app developer has secured a $4 million funding line from cornerstone shareholder the Huljich family as it chases earnings growth in the United States.