New Zealand shares gain amid light trading, led by Trade Me

Trade Me rose 2.3 per cent to $4.39. Photo / File

New Zealand shares gained in light trading as Fletcher Building's discounted rights issue and upcoming MSCI New Zealand index review weighed on investors' minds. Trade Me and Metlifecare increased while Comvita dropped.

The S&P/NZX 50 index rose 24.97 points, or 0.3 per cent, to 8,369.49. Within the index, 21 stocks gained, 22 fell, and seven were unchanged. Turnover was $85 million, extending yesterday's lacklustre activity.

Fletcher Building remained in a trading halt at $6.27 as investors continue to digest yesterday's underwritten $750m rights issue at a 23 per cent discount. After the close of trading, the company said institutional investors took up 98 percent of their entitlements, raising gross proceeds of $500m. The institutional bookbuild opens tonight and runs until the close of business tomorrow before trading resumes on Friday.

The capital raise is part of a $1.25 billion refinancing plan shoring up the construction company's balance sheet having drawn $280m from its banking facility in the first three months of this year alone. Fletcher also announced plans to sell Formica and its steel roofing tiles business, which Morningstar Research estimates are worth about $700m.

"There are a lot of facets in that stock - it is difficult to read with clarity where it will go," said James Lindsay, a senior portfolio manager at Nikko Asset Management.

Fletcher's rights issue also raised uncertainties about the outcome for the MSCI index review, which Lindsay said was also weighing on activity. Mercury NZ is the smallest member of that index, and declined 1.4 per cent to $3.205 today.

Despite that uncertainty, New Zealand stocks followed Asia higher, led by Trade Me, which rose 2.3 per cent to $4.39. Metlifecare gained 2.3 per cent to $5.83 and Pushpay Holdings advanced 1.8 per cent to $3.98.

Kathmandu Holdings declined 0.8 per cent to $2.54 after the outdoor equipment chain said it would accept $2m of oversubscriptions in its share purchase plan, raising $50m to help fund the purchase of US footwear supplier Oboz Footwear. Briscoe Group, which owns about 19 per cent of the stock, fell 0.3 per cent to $3.50.

Comvita posted the biggest decline on the index, falling 4.1 per cent to $6.60. First NZ Capital cut its target price in the stock to $7.15 from $7.53 after the latest earnings downgrade, citing heightened risks over the honey products maker's production base.

Fonterra Shareholders' Fund units fell 0.2 per cent to $5.74 after dairy prices rose at the latest Global Dairy Trade auction. The fund offers investors exposure to Fonterra Cooperative Group's earnings, which treat farmgate milk prices as input costs. Rival processor Synlait Milk rose 0.2 per cent to $9.58, and milk marketer A2 Milk Co gained 1.3 per cent $12.35.

Sky Network Television fell 2.5 per cent to $2.32, NZX dropped 1.8 per cent to $1.08 and Scales Corp declined 2.2 per cent to $4.40.

Auckland International Airport rose 1.2 per cent to $6.29, Meridian Energy was unchanged at $2.87 and Spark New Zealand advanced 0.3 per cent to $3.435.

Outside the benchmark index, NZME was unchanged at 84 cents after the media group appointed former ASB Bank chief Barbara Chapman to its board.