MARKET CLOSE: NZX 50 falls from record; MRP, Spark drop   29 Jan 2015

MARKET CLOSE: NZX 50 falls from record as investors shed yield stocks after RBNZ comments

By Tina Morrison

Jan. 29 (BusinessDesk) - New Zealand shares fell from a record after the Reserve Bank dropped its tightening bias, pushing the kiwi to its lowest level in almost four years. That prompted overseas investors to reduce holdings of high dividend yielding stocks such as MightyRiverPower and Spark New Zealand as they pull back expectations for future returns.

The NZX 50 Index fell 35.010 points, or 0.6 percent, to 5,759.813. Within the index, 26 stocks rose, 16 fell and eight were unchanged. Turnover was $149.4 million.

"The New Zealand market has been on a tear, getting great support for some of the higher yielding securities, which the market is quite heavy on - it's the first day in a while that we have actually see some of that pull back," said Shane Solly, who helps manage about $1.2 billion in equities at Harbour Asset Management.

"The weakness in the New Zealand dollar might have just given a bit of reason for pause for some of that enthusiasm," he said. "While New Zealand stocks stand out globally because of their dividend yield, it certainly might slow down some of the enthusiasm in the near term."

MightyRiverPower fell 3.9 percent to $3.41, while Spark dropped 3.9 percent to $3.36.

Still, the big step down in the currency has bolstered investor sentiment about some of the bourse's export-focused companies, Solly said.

Fisher & Paykel Healthcare advanced 0.8 percent to $6.31, while Pacific Edge gained 4 percent to 78 cents.

Meanwhile some domestic cyclical business benefited from sentiment that New Zealand's economic growth was likely to outpace that of many other countries, Solly said. "Globally, growth is hard to come by, particularly sustainable growth," he said.

Freightways gained 2.2 percent to $5.99, Mainfreight advanced 2 percent to $16.20 and Fletcher Building rose 2.2 percent to $8.50.

In other stock specific news, New Zealand Oil & Gas, the listed energy explorer, rose 0.8 percent to 62.5 cents after it confirmed it will return $63.2 million of excess cash to shareholders after gaining final High Court orders allowing it to proceed with the plan. The move will effectively return 15 cents a share to investors.

Xero, the cloud-based accounting software firm, declined 1.3 percent to $15.65 after it named US-based Douglas Jeffries as its new chief financial officer, replacing Ross Jenkins who will take on the new role of chief operating officer responsible for field operations. The company has said its execution in the North American market hasn’t matched expectations and it is making key leadership changes in the region to accelerate future growth.

Briscoe Group, which operates the Briscoes, Rebel Sports, and Living & Giving chains, slid 0.3 percent to $2.99. The company said it expects its annual profit to rise at least 16 percent to $39 million as sales advanced 4.9 percent. Briscoe said sales rose 2.9 percent to $167.4 million in its fourth quarter during tough trading conditions that led to aggressive discounting.

(BusinessDesk)

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