MARKET CLOSE: NZX 50 at record as investors hunt yield   8 Sep 2014

MARKET CLOSE: NZX 50 at record as investors hunt yield; Meridian Energy gains

By Suze Metherell

Sept. 8 (BusinessDesk) - New Zealand stocks rose, pushing the NZX 50 Index to a record close, as better polling by the incumbent government ahead of this month's election drew offshore investors back to high yielding stocks such as Meridian Energy, Genesis Energy and Spark New Zealand.

The NZX 50 rose 7.877 points, or 0.2 percent, to 5261.745. Within the index, 28 stocks rose, 17 fell and five were unchanged. Turnover was $136 million.

Two political polls showed a firming in support for the National-led government returning for a third term led by Prime Minister John Key ahead of the general election on Sept. 20. Over the past three weeks an ongoing political scandal surrounding alleged 'dirty tricks' has distracted from the election, and seen the resignation of senior cabinet minister, Judith Collins.

Energy stocks are the most prone to be sold ahead of any electoral uncertainty, as the opposition Green and Labour parties have promised to introduce a state-owned single electricity buyer in a bid to push down retail prices. Still, utility stocks offer a high, steady yield, making them attractive in an investment environment where interest rates remain at historic lows.

Meridian Energy, which has an 8.9 percent dividend yield, climbed 3.5 percent to a record high of $1.345. Genesis Energy, which signalled a dividend of up to 16.5 percent in 2015 in its prospectus, advanced 1.9 percent to $1.875. MightyRiverPower, which has a 6.3 percent dividend yield, rose 1.7 percent to $2.43. By comparison, an 18-month term deposit at ANZ Bank New Zealand of at least $10,000 pays interest of 4.75 percent.

Electoral uncertainty "is quite significant for offshore investors. MMP is a little difficult for offshore investors to understand so some of them got a little nervous when the polls started to move against National and it was a little less certain around the future," said Paul Harrison, portfolio manager and director at Salt Funds Management. "Investors seem to be buying these ahead of the dividend being paid, in the anticipation they will carry on with that dividend.

Helping polish the appeal of higher-yielding stocks, US government securities are heading for their biggest yearly gain since 2011, driving yields lower. Spark, formerly Telecom Corp, has a dividend yield of 5.9 percent and rose 1 percent to a more than six-year high of $3.10 today. Property For Industry rose 2.2 percent to $1.42. Goodman Property Trust increased 0.9 percent to $1.105.

"We've had a massive bond rally globally, so anything with yield has been very popular and has gone up, in line with bond markets around the world," Harrison said.

Heartland New Zealand advanced 2.1 percent to a two-month high of 98 cents. The Christchurch-based bank said it has taken a 10 percent stake in peer-to-peer lender HarMoney for an undisclosed sum and will provide funding through New Zealand's only licensed platform as part of its strategy to grow earnings by diversifying its finance options.

Sky Network Television fell 2.2 percent to $6.16, as some $49.7 million worth of its shares changed hands. New Zealand's dominant pay-TV company said it failed to renew the broadcast rights to US PGA Golf, European PGA Golf and the PGA Asian Tour Golf. Pay-TV providers are coming under increasing pressure as their audience base turns to free, albeit not always legal, options online.

"Investors have looked at what Foxtel has done recently where they've cut their packages by up to 50 percent," Harrison said. "The implication is if Foxtel is doing it in Australia in response to online TV then perhaps Sky TV has to follow suit."

Diligent Board Member Services fell 0.7 percent to $4.46. The governance app developer, which was beset with administrative mis-steps last year, has been censured for failing to file earnings with the stock market operator, and will pay $100,000 to the discipline fun , its second public telling off after breaching listing rules last year.

Guinness Peat Group, which owns UK threadmaker Coats, was the worst performer on the day, down 6.6 percent to 57 cents.

Pacific Edge declined 0.7 percent to $4.46 cents. The Dunedin-based biotech company has gained 29 percent in the past month, and investors were taking opportunities to lock in profit, Harrison said.

Fletcher Building, New Zealand's largest listed company, slipped 0.7 percent to $9.19.

Argosy Property fell 1.9 percent, or 2 cents, to $1.01, after shedding rights to its 1.5 cent per share interim dividend.

(BusinessDesk)

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