New Zealand shares rose to a two-month high, paced by Chorus, Kathmandu and Sky Network Television as the prospects of strong economic growth drew retail investors to the equity market. Hallenstein Glasson Holdings tumbled after posting weak December sales.
The NZX 50 Index advanced 8.26 points, or about 0.2 per cent, to 4921.29, the highest since November 15. Within the index, 24 stocks rose, 17 fell and nine were unchanged. Turnover was $184 million, the highest so far this year.
Business confidence has soared to a 20-year high amid signs of a broadening pickup in the New Zealand economy, according to the Quarterly Survey of Business Opinion this week, stoking optimism the local sharemarket will extend a two-year rally in 2014.
Chorus, the network provider and one of last year's worst performers, rose 2.3 per cent to $1.575, while outdoor clothing retailer Kathmandu rose 2.1 per cent to $3.42. Sky TV gained 1.8 per cent to $6.10.
"A lot more retail investors are heading into the market for the year ahead, and that's where we are seeing the inflows," said Bryon Burke, head of equities at Craigs Investment Partners.
Hallenstein tumbled 18 per cent to $3.50 after saying December sales fell 10 per cent from the same month of 2012. First-half profit will decline as much as 39 per cent to between $6 million and $6.3 million, said the Auckland based company, which has previously flagged the threat of increased rivalry from internet-based retailers.
"They're still making money, that's the good thing." Burke said. "I think there's a lot of retail companies still struggling with online sales. It may be a specific apparel thing, rather than general merchandise."
Warehouse, the biggest listed retailer, fell 1.3 per cent to $3.74 and children's clothing chain Pumpkin Patch dropped 2.7 per cent to 73c.
Guinness Peat Group jumped 5.8 per cent to 63.5c after a late rally.
Fletcher Building gained 0.3 per cent to $9.06 and Telecom climbed 1.3 per cent to $2.43. Auckland International Airport was unchanged at $3.55. Air New Zealand, which announced an alliance with Singapore Airlines, rose 0.6 per cent to $1.70.
Xero, the cloud-based accounting company, fell 2.6 per cent from a record to $41.25 after it was issued a "please explain" from the stock market regulator for its 42 per cent gain throughout December and January.
"The regulators have said, 'Hang on a second, your price has risen yet you've said nothing, why is that?'," Burke said.
Wynyard Group, the security software company, extended its gains, rising 6.7 per cent to a record-high close of $2.40. "A lot of these companies aren't turning a profit but it's a definite trend.
"People are trying to put a few more growth stocks in their portfolios so they don't miss out on the next Xero," Burke said.