Market commentary

WELLINGTON: New Zealand shares gained on market strength from the weaker Kiwi dollar, led higher by Trade Me Group and a2 Milk Co, while Fonterra Shareholders Fund dropped as its expected final dividend was removed.

The S&P/NZX50 Index rose 70.42 points, or 0.8%, to 9,010.61. Within the index, 40 stocks rose, seven fell and three were unchanged. Turnover was $111 million.

Greg Easton, investment adviser at Craigs Investment Partners, said it was a fairly positive day for the benchmark index.

‘‘Some of the biggest movers are the duallisted NZAustralia stocks. It could be that Australian investors are seeing a bit of value with the Aussie dollar buying $1.11 versus under $1.10 a couple of days ago.’’

The notable exception to yesterday’s strength was Fonterra Shareholders Fund units, down 2.5% to $4.98. Fonterra Cooperative Group does not expect to pay a final dividend this year as it bolsters its balance sheet after paying Danone over the 2013 botulism scare and writing down its Being mate Baby & Child Food investment.

It affirmed normalised earningspershare guidance of 2530c and anticipates dividends will only be the 10 cents per share already paid in April. It also trimmed its 201718 forecast farmgate milk price to $6.70 a kilogram of milk solids from $6.75/kgMS.

‘‘It’s a chance for the new chairman to show his stance on capital structure and balancesheet strength and he has emphasised that it’s all about strengthening the balance sheet after what has been a pretty terrible year in terms of cash coming out for no good reason. They mentioned specifically the payment to Danone and the impairment on the Beingmate investment,’’ Easton said.

‘‘This is the first time in recent years that they’ve been so severe on withholding cash, and it is a bit of a surprise because they have been in a position where they’ve had to help farmers out to find other ways to get cash when the payout has been low. This is a bit of a turnaround on that behaviour.’’

Rival Synlait Milk dropped 1.4% to $10.75, while Fletcher Building declined 0.9% to $6.92. Duallisted Trade Me Group led the index higher, up 3% to $4.79, as a2 Milk Co rose 2.7% to $10.77 and Arvida Group gained 2.3% to $1.33.

Skellerup Holdings rose 2% to $2.03 and NZX gained 1.9% to $1.10. — BusinessDesk