NZ shares eke out gain as yield plays remain attractive

Meridian Energy led the market higher despite rising tensions in the Middle East

New Zealand shares were dragged higher as blue-chip companies offering reliable dividends, such as Meridian Energy and Spark New Zealand, gained amid light trading in an uneasy market.

The S&P/NZX 50 Index increased 2.54 points, or 0.02 per cent, to 11,629.86. Within the index, 20 stocks rose, 24 fell, and six were unchanged. Turnover was $83.7 million, of which Metlifecare accounted for $21.3m.

Investors are still grappling with the impact of Iran-US tensions following the killing of Iranian military commander Qassem Soleimani last week. The heightened rhetoric initially pushed up oil and gold prices but both have since eased and equity markets across Asia bounced back today.

"Investors are focused on the macro news with the posturing between Iran and the US and the impact it might have on markets," said Grant Davies, an investment adviser at Hamilton Hindin Greene.

Domestic news is typically light in January and Davies said next week's signing of an interim trade agreement between the US and China will also attract attention. Reliable cash flow remained in vogue and companies offering reliable dividends were among the day's gainers.

Meridian led the market, up 3 per cent at $5.15 on a volume of 1.1 million shares, below its 90-day average of 1.9 million shares. Argosy Property rose 2.2 per cent to $1.40 and Spark advanced 2.2 per cent to $4.495 with 1.3 million shares traded.

Among other yield stocks to gain, Chorus rose 2.1 per cent to $6.41, SkyCity Entertainment Group increased 2 per cent to $4.05 and Z Energy was up 1.6 per cent at $4.48.

Infratil extended its gain, up 0.4 per cent at $5.22. The infrastructure investment firm yesterday raised the valuation of its 48 per cent stake in CDC Data Centres by as much as $700m, which also increased the incentive fee payable to manager Morrison & Co.

Davies said the low interest rate environment was supporting asset valuations of all types as investors seek to secure reliable cash flow.

Metlifecare was the most traded stock on a volume of 3.1 million shares, well up on its 398,000 average. The stock increased 0.2 per cent to $6.86, still below the $7 takeover offer by Swedish buy-out firm EQT.

The takeover bid stoked demand for retirement village and aged care operators last month, and Ryman Healthcare and Arvida Group were among the NZX50's top performers in 2019.
Retirement stocks gave up some of those gains yesterday, with Oceania Healthcare down 3.1 per cent at $1.26 with 1 million shares changing hands. Ryman was down 1.6 per cent at $16.90, Summerset Group declined 1.2 per cent to $8.88 and Arvida decreased 0.5 per cent to $1.89.

Fonterra Shareholders' Fund units decreased 0.3 per cent to $4.03 ahead of the first Global Dairy Trade auction of the year. Synlait Milk increased 0.1 per cent to $9.08 and a2 Milk declined 0.5 per cent to $14.68.

Genesis Energy declined 1.6 per cent to $3.05, Auckland International Airport was down 1.5 per cent at $9.07 and Refining NZ slipped 1.1 per cent to $1.83. Kiwi Property Group decreased 0.3 per cent to $1.555 on a volume of 1.2 million.

Outside the benchmark index, New Zealand Oil & Gas fell 5.7 per cent to 66 cents, giving up some of yesterday's gain when it followed Australian energy stocks higher on the strong oil price.