Market close: NZ shares rise for third day as optimism persists

Refining NZ led the market higher, climbing 8.8 per cent to 87 cents. Photo / File

New Zealand shares rose for a third day as investors remain upbeat about the potential recovery from the pandemic disruption.

The S&P/NZX 50 Index advanced 104.53 points, or 0.9 per cent, to 11,222.80. Within the index, 37 stocks rose, 10 fell, and three were unchanged. Turnover was $307.5 million.

The benchmark index's strength has followed global markets as investors become increasingly confident the world economy would return to its former strength swiftly.

Investors have been seeking bargains, buying companies that have lagged behind the recent rally and selling out of firms that remained strong through the pandemic.

"The pockets that have performed well are the ones that hadn't recovered yet from the Covid selloff in March," said Sam Trethewey, a portfolio manager at Milford Asset Management.

"Investors are looking at them as an opportunity on the view the downturn might not be as bad."

Bank economists have started to adopt a less gloomy outlook on economic recovery in recent days. BNZ head of research Stephen Toplis said with more than a week with zero new Covid cases, there were grounds for optimism. He now expects GDP to return to pre-Covid levels in the second half of 2022, a full year earlier than previously forecast.

Milford's Trethewey said whether the increased economic activity will last was the key question for investors.

"We are seeing real-time indicators, which the bank economists are looking at, spiking up at the moment," he said. "But is this just a catch up after a quiet couple of months? Or is this level sustained?"

Refining NZ led the market higher, climbing 8.8 per cent to 87 cents. Trethewey said investors were happy to buy the refinery operator on the expectation of growing demand for fuel as the economy bounces back. The share price is still half of where it started the year, despite jumping more 20 per cent this week.

Tourism Holdings rose 7.8 per cent to $2.34, bringing its gain for the week to more than 30 per cent. Today the government announced the company would receive $4m to support its Discover Waitomo business as part of an effort to protect strategic tourism assets.

"It is certainly positive at the margin that the government is willing to step in and help with those sorts of assets," Trethewey said.

Gentrack advanced 7 per cent to $1.85, also climbing roughly 30 per cent through the week.

Heartland Group Holdings increased 5.6 per cent to $1.33. Trethewey said the specialist banking provider was closely tied to economic conditions as it engaged in more marginal lending.

Air New Zealand rose 4.1 per cent to $1.51 and Auckland International Airport advanced 3.6 per cent to $7.10.

The national carrier today announced its plans to increase operations to 55 per cent of normal domestic capacity. The news coincided with progress on a transtasman bubble with a detailed set of proposals due to be delivered to the New Zealand and Australian governments by the end of the week.

NZX rose 1.4 per cent to $1.43. Today the securities exchange operator said trading volumes in May more than doubled those last year at 1.04 million trades, with an average daily value of $208m.

Vista Group International posted the day's biggest decline, dropping 6.5 per cent to $1.86. The cinema software developer's recently rally stumbled following an indication that it would need to downsize its business to match the new operating environment.