Mercury and Genesis lead market higher, as Air NZ slides

New Zealand shares rose, led higher by gains from Mercury New Zealand and Genesis Energy, while Xero was flat on news that its chief executive had sold 15 per cent of his stake in the company.

The S&P/NZX 50 Index gained 27.28 points, or 0.3 per cent, to 8061.98. Within the index, 24 stocks rose, 16 fell and 10 were unchanged. Turnover was $238 million.

Mercury New Zealand led the index higher, up 2.7 per cent to $3.44, while Genesis Energy rose 2.3 per cent to $2.42 and Summerset Group Holdings gained 1.7 per cent to $4.88.

Xero was up 0.03 per cent to $33.01. Chief executive and company founder Rod Drury sold 3 million shares for $94.5 million, boosting the accounting software firm's liquidity as it prepares to shift to a sole ASX listing.

Drury sold the shares in a placement to institutional and professional investors at $31.50 apiece, in his biggest transaction since taking the company public in 2007.

He remains Xero's largest shareholder with 17.7 million shares, or about 13 per cent of the company.

“It was at a reasonable discount so the stock has traded down most of the day and had just climbed back up to where it closed over the day,” said Matt Goodson, managing director at Salt Funds Management.

“It's interesting that quite a chunk — 1.39 million of the 3 million shares — came into New Zealand. It is an interesting comment on the current controversy about Xero delisting.

“Just thinking that if you de-list from New Zealand, that all the volume goes to Australia is wrong,” Goodson said.

“A lot of the volume is arbitrage activity between the two markets, which often depends on currency movements. I think they'll be shocked at how much trading activity dries up if and when they de-list.”

Air New Zealand was the worst performer, down 2 per cent to $3.115, with

Spark New Zealand dropping 1.2 per cent to $3.625.

Contact Energy fell 1.1 per cent to $5.55 while Fisher & Paykel Healthcare gained 0.7 per cent to $13.55.

Goodson said the key driver for both Contact and Fisher & Paykel's share prices right now was the news that Contact will leave the MSCI Index, to be replaced by Fisher & Paykel. “It has been well-anticipated so it will be fascinating to see how the prices move on the day that happens,” he said.

Precinct Properties New Zealand was unchanged at $1.31. The Auckland-based commercial property investor has raised $100m in an oversubscribed seven-year bond issue, paying annual interest at the bottom end of its indicative margin.

Its $75m offer was oversubscribed, with all $25m of extra allocations taken up, the company said in a statement.

The price for the issue was set in a bookbuild at a margin of 1.5 per cent above the seven-year swap rate, the bottom of an indicative range between 1.5 and 1.6 per cent. The bonds will pay annual interest of 4.42 per cent.

Outside the benchmark index, Wellington Drive Technologies dropped 17.7 per cent to 14c. The company, which makes energy-efficient motors for commercial refrigerators, widened its loss to $1.5m in the third quarter and downgraded its 2017 earnings guidance on slower customer demand, though it's still forecasting its first net profit for the 2018 financial year.