High-yield stocks lead surge
Reserve Bank’s stance stokes demand for good dividends
New Zealand shares pushed higher after the central bank held interest rates at a record low and unexpectedly kept its forecast rate track unchanged, stoking demand for dividend-paying stocks including property firms and power companies. Xero led gains after it crept closer to profitability.
The S&P/NZX 50 added 65.51 points, or 0.9 per cent, to 7489.710. Within the index, 38 stocks rose, four were unchanged and eight fell. Turnover was $180 million.
New Zealand’s sharemarket outperformed most of Asia. Highdividend paying shares such as electricity generator-retailers fared well. Genesis Energy added 2.7 per cent to $2.27, and Contact Energy was up 1 per cent at $5.26.
“It was a strong day on the local market after the Reserve Bank kept rates unchanged. That’s given heart to this market that just does not want to lie down,” said Hamilton Hindin Greene broker Grant Williamson.
Property companies with steady dividends also fared well. Investore Property rose 1.5 per cent to $1.33, Precinct Properties gained 0.8 per cent to $1.21 and Vital Healthcare Property Trust increased 2.5 per cent to $2.275. Vital Healthcare said it has entered a conditional agreement with Acurity Health Group to become its long-term real-estate capital partner. Separately, in its third- quarter update, Vital said profit attributable to unit holders of the trust was $83.45m in the nine months to March 31, up from $69.35m in the prior period.
Fisher & Paykel Healthcare added 2.3 per cent to $10.51, benefiting from a tumble in the New Zealand dollar in the wake of the central bank’s announcement.
Xero led the benchmark index higher, rising 5.3 per cent to $23 after the company said its net loss was $69.1m, narrower than the $82.5m reported in the prior period. Chief executive Rod Drury didn’t specify when the company might report a maiden profit but did note the company was ebitda-positive in the second half of the year, excluding share-based payments, and the operating cash flow also moved into positive territory.
Z Energy added 0.8 per cent to $7.89 after it more than tripled its annual profit after acquiring Chevron New Zealand’s Caltex and Challenge! brands.
Profit jumped to $243m, or 61c a share, in the 12 months ended March 31, from $64m, or 16c, the year earlier, it said.
A2 Milk also helped bolster the index, adding 3.5 per cent to $3.80, as investors continue to be cheered about its prospects in China, said Williamson.
In the other direction, the biggest loser was Sky Network Television, which shed 1.9 per cent to $3.66.
The stock has struggled to gain any traction since the Commerce Commission rejected a tie-up between the pay-TV operator and Vodafone New Zealand
Some profit taking in Heartland Bank weighed on the index as it ended down 1.7 per cent at $1.78.
The stock rose sharply earlier in the week on news that Australianowned banks faced new deposit levies across the Tasman.
The dual-listed Australian banks rallied somewhat after chief executives of the big four banks hinted that costs from the tax could be passed on to customers.
Tilt Renewables, which operates wind and solar generation facilities, ended flat at $2.14 after reporting its first result since its demerger from Trustpower. —