Power giants surge $365m on election result

Meridian Energy. Photo / Simon Baker

Meridian, Mighty River stocks lead the way after the election removes political uncertainty.

Investors in Genesis Energy, Mighty River Power and Meridian Energy were more than $600 million richer on paper at one point yesterday after their shares were boosted by National's decisive victory in Saturday's general election, which swept away regulatory risks associated with opposition parties.

The market capitalisations of the three electricity firms - which were floated in the Government's controversial state asset sales programme - rose by a collective $621 million as the stocks surged shortly after the market opened.

At their closing prices the three firms' valuations had gained $365.6 million.

Instalment receipts in Meridian Energy rose by more than 10 per cent to an intraday high of $1.60 just after the market opened, before falling back to close at $1.52 last night.

Mighty River Power shares finally rose back above the $2.50 initial public offer price to hit a high of $2.63, before closing up 7.5 per cent at $2.59.

Genesis Energy stock reached a high of $2.08 and closed up 1.6 per cent at $1.95, while TrustPower shares closed up 2.9 per cent at $7.40 and Contact Energy stock finished the day up 4.5 per cent at $5.85.

Labour and the Green Party had intended to impose new regulation on the sector with the aim of making electricity more affordable for New Zealanders.

The NZX 50 gross index, which has gained almost 10 per cent this year, closed up 1.06 per cent at 5236.3.

Craigs Investment Partners head of private wealth research Mark Lister said the electricity stocks, which offered investors attractive dividends, might continue to gain ground in the weeks ahead.

"I think they'll continue to push higher over the coming weeks as people get comfort around the political environment and what it means for those stocks," Lister said.

There were fears going into the election that NZ First leader Winston Peters could become a kingmaker in the formation of a new government, which might have led to protracted coalition negotiations that would have unsettled the market. Other opposition policies such as Labour's proposed capital gains tax and the Greens' carbon tax would also have been negatively received by investors.

Milford Asset Management executive director Brian Gaynor said National's success was positive for the market - and business confidence in general - but post-election rallies tended to be short-lived.

"By Thursday politics will be completely off the agenda."