New Zealand shares edged higher as Mercury NZ's decision to press ahead with the second stage of what will be the country's biggest wind farm had some investors revisiting their fears of the energy-hungry Tiwai Point smelter closing.
The S&P/NZX 50 Index increased 6.52 points, or 0.1 per cent, to 10,926.31. Within the index, 23 stocks rose, 19 fell and eight were unchanged. Turnover was $140.4 million.
Mercury, which will join the MSCI New Zealand Index later this month, today announced it will go ahead with a $208m southern element of a planned wind farm at Turitea. Chief executive Fraser Whineray said the smelter's closure by 2030 was always considered likely and didn't change Mercury's view on investment risk. The shares rose 0.8 per cent to $4.98 on a volume of 1.7 million shares, more than its 90-day average of 998,000.
Meridian Energy, the smelter's primary supplier, increased 1.7 per cent to $4.72 with 2.8 million shares changing hands, more than its 1.6 million average. The response wasn't universal, given the new wind farms will also compete with the other generator-retailers. Contact Energy fell 1.2 per cent to $7.15 on a volume of 1.2 million and Genesis Energy dropped 1.5 per cent to $3.25.
Peter McIntyre, an investment adviser at Craigs Investment Partners, said the decision had surprised some investors given the uncertainty around the Tiwai Point smelter's future.
"The Tiwai prospect of leaving New Zealand is priced in, to a certain extent, to some of those gen-tailers now, and maybe Mercury had moved too far down the planning process to back out," he said.
Kathmandu Holdings led the market higher, up 3.1 per cent at $3.02 on a volume of 180,000, down on its 314,000 average.
Heartland Group rose 1.2 per cent to $1.67 after forecasting another increase in annual profit at today's annual meeting.
Vital Healthcare Property Trust increased 1.2 per cent to $2.61 after reporting a first-quarter loss of $1.4m, due primarily to unrealised losses on derivatives.
McIntyre said tomorrow's Reserve Bank policy review was hanging over the market, with investors tending to predict the committee will cut the official cash rate a quarter-point to 0.75 per cent. Property companies have been under pressure in recent weeks as global swap rates have increased, reducing the attraction of the dividend yield of the stocks.
Stride Property fell 1.8 per cent to $2.24 today, Investore Property was down 1.1 per cent at $1.87 and Precinct Properties New Zealand declined 0.6 per cent to $1.79 with 1.2 million shares traded.
Auckland International Airport fell 2.1 per cent to $9.10 on a volume of 1.2 million shares after government data showed short-term visitor arrivals entering New Zealand through the country's main gateway was flat, whereas other airports registered increases.
Air New Zealand decreased 0.5 per cent to $2.87 after it announced several hundred new regional routes to replace rival Jetstar's pared-back New Zealand operation.
Westpac Banking Corp posted the day's biggest decline, down 3.7 per cent, or $1.12, at $28.88. The dual-listed bank shed rights to an 80 Australian cent dividend today.
Fonterra Shareholders' Fund units declined 2.4 per cent to $4.05.
Spark New Zealand was the most traded stock on a volume of 2.9 million shares. It increased by 0.1 per cent to $4.44. Of other stocks trading on volumes of more than a million shares, Fletcher Building increased 0.2 per cent to $5.16, Oceania Healthcare gained 2.9 per cent to $1.07 and Fisher & Paykel Healthcare was up 0.2 per cent at $20.90.