NZ shares rise as investors optimistic on electricity market

File photo / Kenny Rodger

New Zealand stocks advanced, led by electricity shares as investors anticipate the National Party may win this year's election, boding well for the sector under threat of increased regulation and lower earnings should a Labour-Greens coalition gain power.

The NZX 50 Index rose 16.363 points, or 0.319 percent, to 5142.896. Within the index, 23 stocks rose, 20 fell and six were unchanged. Turnover was $112.6 million.

"The stand out would have to be the electricity generators today," said Hamilton Hindin Greene director Grant Williamson, citing a new high for Meridian Energy instalment receipts of $1.17. "Confidence is quietly building in those stocks."

Meridian Energy jumped 4.5 cents even though shareholders holding the stock today had no entitlement to the company's 4.19 cent dividend to be paid on April 15 after the stock went ex-dividend yesterday.

"Shareholders will be extremely happy," Williamson said. "That is turning into quite a good new listing for shareholders who have remained on board."

Among other electricity stocks, Contact Energy rose 1.3 percent to $5.33, Vector increased 1.3 percent to $2.43, Infratil gained 0.7 percent to $2.275 and MightyRiverPower advanced 0.5 percent to $2.19.

The rise in electricity shares is surprising given a new energy stock is to join the market next month, Williamson said. The government will announce later today the price that it will sell Genesis Energy shares at ahead of its partial listing next month.

"It probably has come as a little bit of a surprise given that Genesis is now on the table," Williamson said. "It certainly adds confidence to Genesis, the way the current listings are performing. "

Meanwhile, network company Chorus jumped 6.5 percent to a four-month high of $1.73, making it the best performer on the benchmark today. Investors gained more certainty around regulation after the Commerce Commission said it plans to determine a final price for what Chorus can charge users of its copper line services by Dec. 1.

"Investors are starting to see a recovery in what has been a pretty disappointing stock over the last 12 months," Williamson said. Chorus shares have dropped 38 percent the past year.

Tech darling Xero declined, down 2.4 percent to $40 as investors realised some of their profits from the cloud-based accounting stock's 264 percent gain over the past year.

"Having been such a great performing stock there was always the prospect that they would come under selling pressure at some stage," Williamson said. "Investors are wanting to book in some pretty nice profits."

Scott Technology, the industrial automation firm, dropped 3.2 percent to $1.50 after reporting a 63 percent slump in first-half profit as a strong New Zealand dollar eroded the company's export earnings and stiff competition pushed down margins.

Units in the Fonterra Shareholders Fund slipped 1.3 percent to $6.01. Deutsche Bank said in a research report that it retains its 'sell' rating on the units, with a 12-month target price of $5.64. Deutsche Bank said Fonterra Cooperative Group needs to make it far clearer to farmers and other investors how its business model operates, after the dairy exporter shored up a slump in first half profits by intervening in the regulated price it pays for milk at the farm gate.