NZ shares up as Fonterra units hit four-month high

Good growing conditions and the prospect of higher milk production raised interest in units. Photo / Mark Mitchell

New Zealand shares rose in quiet trading, led by Fonterra Shareholders' Fund units which hit a four-month high as investors and suppliers take some confidence in the dairy processor's new strategy.

The S&P/NZX 50 Index increased 82.80 points, or 0.8 percent, to 10,975.62. Within the index, 36 stocks rose, nine fell, and five were unchanged. Turnover was $69.1 million, with just one stock trading on volume of more than a million shares.

Grant Davies, an investment advisor at Hamilton Hindin Greene, said trading was very quiet, in part because investors were somewhat occupied by three capital raisings that are underway: Kathmandu, Goodman Property Trust, and Tower.

Kathmandu was the most traded stock on a volume of 1.1 million shares, more than three times its 90-day average of 283,000. The outdoor equipment chain is in the process of raising $145 million in an entitlement offer to help fund its A$350 million Rip Curl acquisition. The shares were unchanged at $3.10.

"Corporate activity going on in the background is taking up a bit of time for brokers," Davies said.

Goodman Property slipped 0.2 percent to $2.21 and Tower fell 2.2 percent to 67 cents.

Fonterra rose as high as $4.03, the highest since mid-June, and ended the day up 5.8 percent at $4 on a volume of 440,000 units, about twice its 90-day average of 216,000. The farmer-owned shares rose the same amount, up 5.8 percent at $4. Both securities have been on the rise since Fonterra unveiled a streamlined strategy to extract value rather than pursuing volume.

Davies said the stock had recovered some ground since Fonterra unveiled the strategy, but also noted that good growing conditions and the prospect of higher milk production could see farmers holding more shares to meet that expectation.

A2 Milk rose 1 percent to $13.19 while Synlait Milk decreased 0.4 percent to $9.02, with just 5,000 shares traded.

Restaurant Brands New Zealand was up 5.1 percent at $11.39 on a volume of 28,000 shares. Davies said the stock was thinly traded since its partial takeover by Finaccess Capital and, as such, was prone to sharp swings.

Ebos Group rose 1.1 percent to $25.14 ahead of its annual meeting, where retail investor lobby, the New Zealand Shareholders' Association, plans to oppose a planned increase in directors' fees over the lack of transparency on the decision.

Fletcher Building increased 1.1 percent to $4.81. The first day of court proceedings kicked off today, where Fletcher is being sued and is countersuing contractor Electrix over the Christchurch Justice & Emergency Precinct.

Davies said activity on the market was very quiet, with a number of international uncertainties - such as Brexit, US President Donald Trump's future, and the US-China trade war - weighing on investors.

"People are tending to be a little more measured in their buying and selling," he said.

Spark New Zealand increased 0.1 percent to $4.565 on a volume of just 702,000 shares, well short of its 3.2 million average.

Sky Network Television posted the day's biggest decline, down 1.8 percent at $1.10, with 111,000 shares traded, down on its 821,000 average.

Outside the benchmark index, New Zealand Oil & Gas was unchanged at 62 cents ahead of next week's special meeting. The NZ Shareholders' Association plans to vote against what it considers an "opportunistic" takeover offer by controlling shareholder OG Oil & Gas at 62 cents.

PaySauce rose 5.9 percent to 54 cents after saying it more than doubled third-quarter revenue to $401,000.