NZ shares climb to record on low interest rate outlook

ACC's investment arm emerged as a substantial shareholder in Sky TV.

New Zealand shares rose to a record as the prospect of low interest rates for even longer stoked demand for companies offering regular income such as Meridian Energy and Mercury NZ. Synlait Milk extended its recovery from a weak first-half result earlier this week.

The S&P/NZX 50 Index climbed 89.68 points, or 0.9 percent, to a record 9,550.99. Within the index, 36 stocks gained, 10 fell, and four were unchanged. Turnover was $106.7 million, with just five companies trading on volumes of more than a million shares.

Companies offering stable dividends remain in vogue among investors as the Federal Reserve's flatter interest rate track continues to support yield stocks such as utilities and property companies.

"The world is now in a seemingly benign and low interest rate environment," said Peter McIntyre, an investment adviser at Craigs Investment Partners. "Low interest rates are like sugar for the market and we've seen that today."

The electricity generator-retailers were all beneficiaries, with Mercury hitting a record $3.80 and closing at $3.79, a 3.6 percent gain. Meridian also reached a record at $4.09. It closed at $4.08, up 3.2 percent, on a volume of 2.5 million shares. Contact Energy rose 2.6 percent to $6.60 on a volume of 2.2 million, having hit a 10-year high of $6.64 during the day. Genesis Energy was up 2.4 percent at $2.96 and was another to broken new ground at $2.97.

Trustpower increased 1.4 percent to $6.38, and its cornerstone shareholder Infratil was up 2.5 percent at $4.035.

Synlait Milk led the market higher, up 5.1 percent at $10.53. The milk processor is bouncing back from a 14 percent slump on Wednesday when it unexpectedly reported a drop in first-half earnings. Air New Zealand rose 4 percent to $2.32 and is another stock that's been under pressure since it issued a profit warning in February.

McIntyre said it looked like investors were using the recent weakness in both companies to buy back in at a cheaper price.

A2 Milk increased 0.7 percent to $13.81 on a smaller volume than usual of 628,000 shares. Fonterra Shareholders' Fund units rose 0.5 percent to $4.22.

Spark New Zealand was the most active stock with volume of 3 million, less than its 5.6 million three-monthly average. It rose 1.1 percent to $3.58.

Sky Network Television increased 0.7 percent to $1.36 on a volume of 1.5 million. It hired a Deloitte partner to fill in as an interim chief financial officer while it finds a permanent replacement for veteran Jason Hollingworth. Separately, ACC's investment arm emerged as a substantial shareholder in the pay-TV operator.

Auckland International Airport increased 0.5 percent to $7.885 on a volume of 1.1 million.

Vector decreased 0.3 percent to $3.55 after it was fined almost $3.6 million for breaching its reliability standards in the 2015 and 2016 regulatory periods.

Summerset Group posted the biggest decline on the day, down 2.4 percent at $6.51.

Wellington International Airport, which is controlled by Infratil, set the interest rate on its $125 million, 11-year bonds at 4 percent. The rate will reset after six years. The notes will list on the NZX debt market.