Rebounding stocks lead index to record

SkyCity is up 2.6 per cent to $4.81. Photo / Richard Robinson

New Zealand's benchmark stock index hit a record high, led by Air New Zealand and Tower, while Steel & Tube Holdings continued to decline.

The S&P/NZX 50 Index rose 27.10 points, or 0.4 per cent, to 7019.64. Within the index, 25 stocks rose, 16 fell and nine were unchanged. Turnover was $97.6 million.

Air New Zealand led gainers on the index, rising 4 per cent to $2.215. It sank to its lowest level since November 2014 last week on concern about increased competition and the likelihood Virgin Australia will need recapitalising before it can be sold.

"It's continuing to consolidate after being sold off close to the $2 mark," said Peter McIntyre, investment adviser at Craigs Investment Partners. "The stock is inexpensive compared to the rest of the market and I think you're seeing investors say this has been too heavily sold off. It trades on a dividend yield above 10 per cent, price-earnings of between five and 10 per cent, it would seem to be reasonable value in this market."

Tower gained 3.8 per cent to $1.52, bouncing off last week's tumble from $1.77 after it posted a wider first-half loss. The insurer wrote down the value of its information technology system, which it said was weighing on its ambitions and needed improving.

SkyCity Entertainment Group, the hotel and casino company, advanced 2.6 per cent to $4.81 and has gained 7.1 per cent this year.

"It's really a tourism-based stock and that's one of the themes running through our equity market at the moment, anything in the tourism sector is being bidded up well," McIntyre said.

TradeMe Group gained 2.1 per cent to $4.81 and Fisher & Paykel Healthcare rose 1.9 per cent to $10.50.

Steel & Tube Holdings was the worst performer, down 2.5 per cent to $1.99. The stock has suffered as its steel mesh came under scrutiny from the Commerce Commission. The commission is conducting a wider investigation into the industry.

Skellerup Holdings dropped 2.2 per cent to $1.32 and Mighty River Power shed 1.3 per cent to $3.02.

Outside the main index, Hellaby Holdings dropped 3.1 per cent to $2.49. The diversified investment company cut its full-year guidance, saying earnings would fall as refinery shutdowns affected its resource services division, whose chief executive will step aside in favour of a new recruit.