NZ power companies soar after National victory 22 Sep 2014
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Meridian, power companies soar, lifting NZX 50 higher after National victory
By Paul McBeth
Sept. 22 (BusinessDesk) - Shares of electricity generators and retailers soared, lifting the benchmark NZX 50 Index, after the National Party's convincing election victory on the weekend wiped out any regulatory fears for the power companies.
The NZX 50 rose 69.288 points, or 1.3 percent, to 5,250.633 at the open today after the Sept. 20 general election delivered the incumbent National Party the ability to govern alone. The partially privatised gentailers rose to records after the election win shut down the threat of regulation, which had been a cornerstone plank for opposition parties in trying to drag down retail power prices.
Meridian Energy led the benchmark higher, rising 7.8 percent to $1.56, followed by an 7.5 percent gain in shares of MightyRiverPower to $2.59, and a 6.3 percent increase in Genesis Energy to $2.04. Contact Energy jumped 6.6 percent to $5.97, TrustPower gained 2.6 percent to $7.38, and infrastructure investor Infratil climbed 4.3 percent to $2.78.
"I'm not surprised they are stronger today - this sector had an overhang of potential regulation," said Rickey Ward, NZ equity manager at JBWere New Zealand equities. "It reflects a market where people are struggling to find value and hunting for certainty and this sector does offer some value and the potential for increasing returns."
National could govern alone based on the upon the election night result of 61 seats in a 121-seat parliament. Assuming that holds once the final count is complete, John Key is likely to form a National-led coalition including two Maori seats and one each from Act New Zealand and United Future in his third term, lifting the government’s total to 65 seats.
Growing support for the National Party in the lead-up to Saturday's election had already bolstered shares of power companies, with the NZX Energy Index up 6.8 percent in the 30 days prior to the vote, outpacing the 2.1 percent increase on the NZX 50 over the same period.
The power companies were the most at threat of regulation in the event of a change of government, and had been sapped by the Labour Party's proposal to introduce a central buying agency just before the listing of MRP last year, the first asset sale in the government's privatisation programme.
Air New Zealand, the national carrier sold down by the government in its asset sale programme, rose 3.4 percent to $1.975.
Other companies facing regulatory threat were more subdued at today's open, with telecommunications network operator Chorus unchanged at $1.75 as it faces a protracted dispute with the Commerce Commission over the pricing of its regulated copper lines network, while casino operator SkyCity Entertainment Group, the beneficiary of a deal with the National-led government to build a convention centre in Auckland, rose 1.1 percent to $3.71.
(BusinessDesk)
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