New Zealand shares rose as companies offering reliable dividends remain attractive in the persistently low interest rate environment. Genesis Energy and Auckland International Airport hit records.
The S&P/NZX 50 Index increased 23.17 points, or 0.2 per cent, to 10,431.22. Within the index, 27 stocks rose, 20 fell, and three were unchanged. Turnover was $105.1 million.
Investors have been taking on equity risk in their hunt for yield over the past 12-18 months as the outlook for global interest rates is for them to stay lower for longer. The yield on 10-year New Zealand government bonds fell as low as 1.535 per cent last week and has been in the unusual position of being lower than their US counterpart since April last year.
That low rate environment has underpinned demand for utilities, infrastructure companies and property firms, many of which have been near all-time highs. Auckland Airport led the market higher today, up 2.2 per cent to a record $9.80 on a volume of 1.2 million shares, in line with its 1.3 million 90-day average.
Genesis Energy rose as high as $3.38, ending the day at $3.31, up 2 per cent. Infratil increased 2 per cent to $4.64, Precinct Properties New Zealand advanced 1.7 per cent to $1.765 and Mercury NZ was rose 1.4 per cent to $3.93.
"It's a continuation of the trend we have seen for a while in yield and property and infrastructure names being well supported," said James Lindsay, a senior portfolio manager at Nikko Asset Management.
Lindsay said the increase in bond yields in recent days hadn't cooled demand for locally listed income equities. "The sectors continue to perform as they have for the last 12-18 months since the Fed and global rates have fallen to lows."
Fletcher Building was the most actively traded stock today. It dropped 6.8 per cent to $4.93 on a volume of 2.6 million shares, more than twice its average. The country's biggest listed building firm yesterday updated investors about how its new strategy was progressing. It also announced plans for buy back $300m of stock on-market, and affirmed annual earnings and dividend guidance.
Lindsay said the composition of earnings was a concern for investors, with weaker margins than expected in the Australian business and extra costs in the New Zealand arm.
Kiwi Property Group decreased 0.3 per cent to $1.62 on a volume of 2.2 million shares, compared to its 1.4 million average, while Spark New Zealand rose 1.3 per cent to $3.93 on 2.2 million, less than half its usual 5.2 million.
Tourism Holdings fell 1.3 per cent to $3.75 on an unusually large volume of 1.2 million shares. About 158,000 shares are typically traded in a day. The rental RV operator is raising $50m in a rights issue at $3.40 a share, with registered stockholders on July 2 able to participate.
Arvida Group was also unusually active, up 0.7 per cent at $1.36 on a volume of 1.8 million shares, compared to its 351,000 average. It's raising $92m in a rights issue at $1.15 a share. The record date for the issue is July 3.
Of other stocks trading on volumes of more than a million shares, Chorus decreased 0.9 per cent to $5.64, Z Energy increased 0.8 per cent to $6.35, and Meridian Energy was up 0.4 per cent at $4.80.
NZX rose 1.8 per cent to $1.12 on a smaller volume than normal of 96,000. The stock market operator today got a clean bill of health by the Financial Markets Authority's annual review of its supervision function.
Outside the benchmark index, TIL Logistics fell 2.2 per cent to $1.32 after trimming annual earnings guidance due to earlier relocation costs than expected. The logistics firm also increased its provision for earn-out payments on its Move Logistics acquisition.
Fonterra Cooperative Group's 2025 bond paying annual interest of 4.15 per cent was the day's most traded debt security on a volume of 892,000. The notes closed at a yield of 2.8 per cent, up 1 basis point.