NZ shares recover; demand for yield boosts Meridian, Spark

Meridian CEO Neal Barclay. Photo / Supplied

New Zealand shares recovered some of yesterday's decline as the demand for reliable income boosted yield stocks such as Meridian Energy and Spark New Zealand. Tourism Holdings gained after confirming annual profit beat guidance.

The S&P/NZX 50 Index increased 29.69 points, or 0.3 per cent, to 10,513.16. Within the index, 22 stocks rose, 20 fell, and eight were unchanged. Turnover was $185.4 million.

Stocks across Asia Pacific were generally stronger as fears over the US-China trade war subsided. China's Shanghai Composite Index rose 1.7 per cent in afternoon trading, Australia's S&P/ASX 200 Index was up 0.5 per cent and South Korea's Kospi 200 Index also rose 0.5 per cent. US President Donald Trump's heightened rhetoric over the trade dispute spurred a sell-off on Wall Street late last week that carried on to Monday.

"The market is following what's happening offshore more closely and whatever Mr Trump is talking about. We don't know what he's going to say next and it can push markets a lot higher or a lot lower," said Grant Williamson, a director at Hamilton Hindin Greene.

The electricity generator-retailers were particular beneficiaries today as reliable income streams remain in demand, he said.

Meridian rose 2.8 per cent to $4.80 on a volume of 4.2 million shares, more than three times its 90-day average of 1.3 million. The country's biggest electricity generator reported record earnings yesterday and lifted dividends by 11 percent.

Contact Energy also rose, up 1.7 per cent to $8.48 on a volume of 1.5 million shares. Genesis Energy increased 1.4 per cent to $3.365 ahead of its result tomorrow.

Tourism Holdings led the market higher, up 5.3 per cent at $3.81 on a volume of 199,000, more than its 178,000 average. The rental RV operator confirmed annual earnings beat guidance and said the outlook for its New Zealand and Australian businesses remained strong. Turning around the US unit remains a work in progress.

Of companies reporting earnings tomorrow, Scales Corp increased 2.5 per cent to $4.53 and Port of Tauranga was up 1 per cent at $6.12.

Spark New Zealand was the most traded stock on a volume of 5.1 million shares, more than its 3.3 million average. The telecommunications company rose 1.3 per cent to $4.395, its highest close since spinning out Chorus in 2011.

Williamson said Spark was one of the stand-out performers in the earnings season so far, with the dividend outlook better than some investors had expected. He said the earnings season as a whole had been average and left an unclear outlook for investors.

The slowing domestic economy, weak business confidence, and uncertain international environment made it difficult for directors to provide guidance, he said.

Of companies trading on volumes of more than 2 million shares, Kiwi Property Group fell 1.2 per cent to $1.59, Air New Zealand was up 1.4 per cent at $2.84, Chorus increased 0.6 per cent to $5.02 and Auckland International Airport slipped 0.2 per cent to $9.20.

Of companies trading on volumes of more than a million shares, Fletcher Building increased 0.2 per cent to $4.44, Goodman Property Trust fell 1.2 per cent to $2.15, Infratil fell 2.4 per cent to $4.52 and A2 Milk Co rose 1.3 per cent to $14.42.

Skellerup fell 3.1 per cent to $2.18 on a volume of 335,000 shares, more than twice its 157,000 average. Jarden analysts downgraded the stock to an 'underperform' from 'neutral' as the uncertain trade environment and weak local dairy sector weigh on the company's growth outlook.

Outside the benchmark index, NZME dropped 6.7 per cent to 48.5 cents in light trading after reporting a 73 per cent slide in first-half profit on a weaker print advertising market and one-off costs such as restructuring. The media group is also focused on reducing debt rather than paying dividends.

New Zealand Oil & Gas was unchanged at 61.5 cents after reporting a $2.9m loss. Exploration losses offset better production from its Kupe and Maari interests, but the company is under a takeover offer from controlling shareholder OG Oil & Gas at 62 cents.

Cavalier Corp was unchanged at 30 cents after confirming a net loss of $16.8m. Its auditor tagged the carpet maker's accounts, noting the board's acknowledgment that it needs to achieve higher prices and bigger sales volumes to meet its banking covenants.

Foley Wines fell 2.6 per cent to $1.85 after almost doubling net profit on completion of its Mt Difficulty acquisition in the year. The declared final dividend was unchanged at 3 cents per share.

The New Zealand government's 2023 bond paying 5.5 per cent annual interest was the most traded debt security on a volume of 3.4 million. The notes closed at a yield of 0.78 per cent, up 3 basis points.