Demand continues for yield stocks
Mercury, Spark up as Briscoe dips on Kathmandu deal
New Zealand shares followed international markets higher as the low-interestrate environment continues to see investor demand for yield stocks.
The S&P/NZX 50 Index rose 71.37 points, or 0.65 per cent, to 10,996.99. Within the index, 24 stocks rose, 19 fell and seven were unchanged. Turnover was light at $92.18 million.
“The S&P 500 was up half a per cent and the US and European markets, for the most part, were up, so there was a positive lead and the market took a while to get going this morning,” Grant Davies, an investment adviser at Hamilton Hindin Green said.
“The key news for today is Kathmandu’s purchase of Rip Curl which is a reasonable-sized acquisition and looks to be a good one given the company’s core competencies,” Davies said.
Kathmandu shares are in a trading halt as the outdoor clothing retailer completes an entitlement offer to raise $145m for the deal.
Briscoe Group, which owns 20 per cent of Kathmandu, saw its share price fall by half a per cent to $3.62 as the company decides whether to take part in the capital raise.
Davies said the running story at the moment is really the low-interest-rate environment and demand for yield stocks, especially as there is talk of a further Official Cash Rate cut in November.
Yesterday the Reserve Bank of Australia decided to lower its cash rate by 25 basis points to 0.75 per cent.
The announcement was made after the NZ market closed. The ASX 200 was up by 0.7 per cent to 6737 in late afternoon trade.
On the NZX strong yielding stocks such as Mercury Energy and Spark performed well yesterday, with the electricity firm up 2.79 per cent to $5.15 and the telco up 1.8 per cent to $4.49 off a volume of 2.3m shares.
Goodman Property Trust was the volume leader yesterday, with its price up 0.23 per cent to $2.22 off almost 3.6m shares traded. Fellow developer and Sylvia Park mall owner Kiwi Property Group also traded more than a million shares, with its price up by 0.9 per cent to $1.65.
Others to trade over a million shares included Z Energy which fell by 0.89 per cent to $5.55 and Auckland International Airport which was up by 1.64 per cent to $9.30. Sky Network Television rose 1.79 per cent to $1.14 after it announced the appointment of Neil Martin as the new global chief executive of RugbyPass.
Cannasouth shares were up by 4.92 per cent to 64 cents with more than 530,000 shares traded. The marijuana company said yesterday it would take a stake in Hawke’s Baybased Midwest Pharmaceutics to accelerate its development. It will pay $1.32m for a 60 per cent stake.
Gentrack continued to fall, and was down by 2.67 per cent to $5.10 after falling by almost 9 per cent on Monday. The utility software firm has downgraded its expected operating earnings yet again, to between $25-26m.
Allied Farmers was up by 4.48 per cent to 70 cents after the firm said its longest-serving director Andrew McDouall would retire at the annual meeting next month.