NZ sharemarket extends gains

F&P Healthcare rose 1.7 per cent yesterday to $5.33 — a record close.

Power companies lead the way as investors spooked by recent volatility hunt for high-yielding stocks

New Zealand shares gained for a third day yesterday, paced by Contact Energy and TrustPower, as investors spooked by recent volatility sought high-yield stocks. Fisher & Paykel Healthcare rose to a record.

The NZX 50 Index advanced 35.23 points, or 0.7 per cent, to 5233.12. Within the index, 28 stocks rose, 12 fell and 10 were unchanged. Turnover was $140 million.

The benchmark index extended its recovery after a period of volatility saw the CBOE Vix Index, also known as Wall Street's fear gauge, spike to its highest level since 2012 last week, affecting global stock markets.

Investors have since returned to equities, and have been chasing high yielding stocks as a shift in sentiment about when the US Federal Reserve will start raising interest rates made reliable dividends more attractive.

"Investors who have sat on the sidelines for a bit, they may have been scared out by the volatility, are putting a bit more money back into the market," said James Smalley, director at Hamilton Hindin Greene.

Power companies, which are held for their reliable source of income, paced yesterday's gains on the local market. Contact, the energy retailer and generator, advanced 1.5 per cent to $6.07. TrustPower climbed 1.3 per cent to $7.30. Genesis Energy, the state-controlled power company, increased 0.5 per cent to $1.98.

"We're seeing Contact taking up the baton as the gentailer having a good day, on the back of Mighty River Power and Genesis's gains the other day," Smalley said.

Spark New Zealand, formerly Telecom Corp and popular with overseas investors for its high yield and liquidity, rose 1.2 per cent to $2.935. Vector, the Auckland power lines company, gained 1.2 per cent to $2.65.

F&P Healthcare, the medical breathing apparatus exporter, advanced 1.7 per cent to $5.33 - a record close. The company has a September balance date and investors are expecting a good result, particularly given the recent fall in the New Zealand dollar, Smalley said.

Fletcher Building, New Zealand's largest listed company, fell 0.6 per cent to $8.61. The building supplies and construction company told shareholders it is forecasting full-year operating earnings to rise as much as 11 per cent, driven by anticipated recovery in the second half. Earnings before interest, tax and significant items are expected to be in the range of $650 million to $690 million, departing chairman Ralph Waters said in his final address to shareholders. That would be up from $624 million in the 2014 year.

Xero, the cloud-based accounting firm, extended its decline to be the benchmark index's worst performer on the day, falling 0.9 per cent to $15.90, its lowest level since August last year.

New Zealand Oil and Gas led the benchmark index higher, gaining 2.8 per cent to 74 cents.

Outside the benchmark index, Cavalier Corp was unchanged at $1, after announcing Cavalier Wool Holdings, its joint venture with ACC and Direct Capital, will merge with New Zealand Wool Services International to make a wool scouring monopoly. Melbourne-based Lempriere, parent of WSI, will take the biggest stake in the new business at 45 per cent, while Cavalier will water down its holding to 27.5 per cent from 50 per cent.

PGG Wrightson, the rural services firm controlled by China's Agria Corp, rose 3.6 per cent to 43.5c after it said it expects to shrug off falling dairy prices and beat its strongest earnings result in several years in 2015.

Diversified investment company Hellaby Holdings rose 0.3 per cent to $2.93.