NZ stocks: Investors chase yield stocks with cash from Powerco shares

6.35pm


Kiwi investors today chased yield stocks after cashing up their Powerco shares this week, nudging the market top-50 index to another new closing high, a broker said.

Offshore investors have been snapping up Powerco shares in a move to realise an arbitrage profit. Powerco shares closed unchanged at 210c, having touched 206c during the session.

Powerco's suitor, Prime Infrastructure, has offered $2.15 a share, a regulatory exemption meaning offshore investors will get cash while domestic investors get a mix of cash and bonds.

As a result domestic investors have dumped their holdings on market, Powerco shares today accounting for $70.9 million -- or 40.5 per cent -- worth of trade.

More than 40 per cent of Powerco has changed hands this week, excluding the 53.65 per cent Prime originally bought from three major shareholders.

Hamilton Hindin Greene broker Grant Williamson said the "messy" trade in Powerco shares had positive implications for the market generally.

"What we are seeing is a lift in some of the good quality stocks as reinvestment of the Powerco proceeds occurs," he told NZPA today.

"The market is chasing the yield stocks to replace the good yield Powerco used to provide," he said.

"Overall, you'd have to say its quite good for the market that this is happening."

As a result, market heavyweight Telecom was up 7c at 596, on turnover of $49.4m. Nuplex was up 7c at 526, Pyne Gould Corporation was up 5c at 640, and Feltex was up 1c at 164.

The benchmark NZSX-50 index was up 19.32 points at 2853.72, another new closing high.

The NZSX-All capital index was up 6.67 points at 948.72. Among the 155 stocks traded were 65 rises and 42 falls. Market turnover was $175.1m.

Carter Holt Harvey was up 6c at 231, while Contact Energy was up 4c at 608. Origin Energy today confirmed it had acquired 51.22 per cent of Contact ex Edison Mission Energy.

Fishing firm Sanford confirmed it had agreed to buy Simunovich Fisheries for $137m, its shares up 10c at 445.

Fisher & Paykel Healthcare was up 5c at 1525, the rise likely being a precursor to its five-for-one share split on Monday.

Meanwhile, the makeup of the top-50 changed today, with Urbus, Calan Healthcare and BIL exiting for Pumpkin Patch, APN News & Media and AXA Asia Pacific.

Turners & Growers closed up 7c at 347, having debuted at 320c on Wednesday.

Other stocks on the move included: Air NZ down 1c at 167, Auckland International Airport up 12c at 726, Baycorp Advantage down 8c at 338, Hellaby up 9c at 609, Ports of Auckland up 5c at 680, and The Warehouse up 5c at 428.

Overseas, the Dow Jones dipped 55.97 points to 10,080.27, the Standard & Poor's 500 lost 0.22 of a point to 1114.58, and the Nasdaq Composite gained 2.90 points to 1896.84.

- NZPA