MARKET CLOSE: NZ shares rise, NZX 50 at 4-yr high 2 May 2012
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New Zealand shares rose, pushing the NZX 50 Index to a four-year high, as the prospect of enduring low interest rates stoking demand for dividend yields. Telecom rose to a multi-year high and auction site Trade Me Group gained to a record.
The NZX 50 Index rose 37.653 points, or 1.1 percent, to 3614.97, the highest close since May 2008. Within the index, 32 stocks rose, 12 fell and six were unchanged. Turnover was $112 million.
Telecom, the biggest company on the exchange, rose 0.4 percent to $2.645, the highest since August 2008.
Telecom has a dividend yield of 11.3 percent while two-year bank term deposits are offering 4.84 percent on average, according to interest.co.nz. Reserve Bank Governor Alan Bollard has said the bank is unlikely to raise the official cash rate from a record low 2.5 percent any time soon.
"There has been a renewed buying interest in blue chip stocks - with the recent Reserve Bank comments creating good demand in higher yielding stocks," said Grant Williamson, director at Hamilton Hindin Greene. "Investors are starting to chase to higher dividend yields."
TrustPower, which has a dividend yield of 8.2 percent, rose 1.4 percent to $7.40.
Trade Me, which was taken public by owner Fairfax Media in December, rose 3.8 percent to $3.82. That compares with its issue price in December of $2.70. Trade Me has 2.96 million active members out of a total New Zealand population of 4.4 million and is the main reason global sites such as eBay haven't taken off.
"It just keeps going from strength to strength - its first financial result as a listed company was positive and it has given a lot of confidence to investors," Williamson said. "I just hope the market is not getting ahead of itself."
Fletcher Building, the biggest construction company on the bourse, rose 2.7 percent to $6.53, the highest since April 2.
Pyne Gould Corp, the finance company controlled by businessman George Kerr, rose 3 percent to 33 cents. The Financial Markets Authority said today it is looking into related party transaction at the firm after its auditors quit.
Auckland International Airport, the nation's busiest gateway, rose 1.8 percent to $2.58. Vector, the electricity and gas lines company, gained 2.3 percent to $2.73.
Heartland New Zealand, the building society that took over Marac Finance, fell 5.1 percent to 56 cents and was the biggest decliner on the NZX 50 today.
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