Investors push electricity shares higher

Contact Energy's geothermal power station in Wairakei. Photo / File Photo

New Zealand shares rose yesterday, led by A2 Milk Co, after it raised $40 million in an oversubscribed placement.

Contact Energy, Meridian Energy and Mighty River Power advanced.

The S&P/NZX 50 index rose 13.01 points, or 0.2 per cent, to 5638.79. Within the index, 23 stocks rose, 19 fell and eight were unchanged.

Turnover was $190 million.

A2 jumped 8.3 per cent to 78c after it raised $40 million in a placement to help fund planned growth in its infant formula business.

The shares were halted at 72c, and were sold at 68c apiece in the capital raise.

"It got that placement away very easily and there were obviously some disappointed investors that couldn't participate or got scaled," said Grant Williamson, director at Hamilton Hindin Greene. "Everything is looking very good for it."

Markets across Asia followed Wall Street higher.

Traders are pushing out their expectations for when the United States Federal Reserve will start raising interest rates after running a near-zero policy since the global financial crisis.

Low interest rates make companies paying higher dividends more attractive and "yield stocks" gained in local trading.

Contact climbed 1.3 per cent to $4.86. Meridian advanced 0.5 per cent to $2.11. MRP rose 0.4 per cent to $2.42. Genesis Energy was unchanged at $1.78.

"The American market is going up because investors have finally decided that the Fed won't move on interest rates any time soon and that's certainly underpinned the equity market," Williamson said.

Demand has certainly come in again for the electricity generators and I think mainly that's going to be investors chasing yield again.

Grant Williamson

"They had weakened off somewhat, so certainly the yield-chasing bargain hunters are into those."

The kiwi dollar is heading for a 3.7 per cent gain against the greenback this week, with a stronger currency weighing on exporters' foreign earnings.

Fisher & Paykel Healthcare, the breathing apparatus manufacturer and exporter, dropped 0.9 per cent to $6.97.

Kathmandu Holdings, the outdoor goods retail chain, declined 2.7 per cent to $1.44.

Xero, the cloud-based accounting software firm, was the worst performer on the benchmark index, down 3 per cent to $16.

Spark New Zealand rose 1.8 per cent to $3.06.

Fletcher Building, the construction and building supplies firm, rose 1.3 per cent to $7.16.