Market close: NZ shares post healthy gain on eve of OCR call

The New Zealand sharemarket played catch-up and posted a healthy gain of more than half a per cent. But attention was more focused on how high will the Reserve Bank go with the official cash rate (OCR)?

The S&P/NZX 50 Index climbed steadily all day and the leading stocks that were hit yesterday made quick recoveries on the eve of the Reserve Bank’s latest monetary policy statement.

The index closed 80.88 points or 0.64 per cent ahead to 12,688.53. There were 71 gainers and 66 decliners over the whole market and volume was steady with 42.14 million shares worth $154.44 million changing hands.

Jeremy Sullivan, investment advisor with Hamilton Hindin Greene, said there was certainly “more green” on the trading board, but all eyes are on the Reserve Bank’s next move to combat rising inflation and cool the housing market.

“The (share)market is placing a 40 per cent chance of a 50 basis points rise. If so, that would be a shock and the Kiwi would get to parity or close to the Australian dollar. If it’s a 25 basis points rise (to 0.75 per cent), then there won’t be too much reaction.”

Sullivan said the market will closely follow bank governor Adrian Orr’s comments on the outlook for interest rates and inflation, and whether it’s transitory or here to stay. “The last thing we want is runaway inflation like in the 1970s and 80s. The main risk in New Zealand is house prices and that’s why we are getting another rate rise.”

The rebounders on the market were Fisher and Paykel Healthcare, up 45c to $31.51; Ebos Group increasing 28c to $36; Auckland International Airport gaining 8.5c to $7.90; and a2 Milk rising 12c or 1.87 per cent to $6.55.

Mainfreight collected 64c to $91.99; Spark gained 4c to $4.40; Freightways rose 15c to $12.25; and Skellerup Holdings was up 8c to $6.03.

Retirement village operators Summerset Group Holdings was up 36c or 2.74 per cent to $13.50; and Arvida increased 2c to $1.94 after reporting an 80 per cent lift in operating profit to $75.5m on revenue of $93.95m, up 9 per cent for the six months ending September.

Arvida built 68 new homes in seven retirement villages, and is planning another 150 over the second half of the financial year. It is paying an interim dividend of 2.5c on December 15.

In the energy sector, Contact was up 8c to $7.98; Meridian increased 6c to $4.58; Mercury gained 7c to $5.82, but Vector was down 7c to $3.83 and Trustpower dived 11c to $7.48.

South Port New Zealand increased 14c to $8.87; and Port of Tauranga increased 4c to $6.75. Port of Tauranga has just filled a $100m seven-year bond issue, with an interest rate of 3.552 per cent, and is planning to spend $68.5m over the next few years extending its container wharf and berths, and introducing container storage automation.

New listings Vulcan Steel was up 20c or 2.44 per cent to $8.40; and TradeWindow gained a further 30c or 17.65 per cent to $2, more than doubling in two days.

Argosy Property, up 1.5c to $1.49, reported a record profit of $127m, which included a property revaluation gain of $91.67m, for the six months ending September, up from $114.57 from the previous corresponding period. Argosy’s net property income was $53.06m, up 5.1 per cent, and its portfolio is valued at $2.12 billion.

Seeka, the country’s biggest kiwifruit grower, has completed the amalgamation with Northland’s Orangewood in a $6.9m deal. Seeka is issuing 639,302 new shares and $1.3m in cash to Orangewood shareholders and is assuming $2.15m of debt. Its share price gained 4c to $5.29.

Other decliners were Vista Group, down 10c or 3.85 per cent to $2.50; Air New Zealand falling 4c or 2.47 per cent to $1.58; Rakon declining 7c or 3.72 per cent to $1.81; Gentrack decreasing 10c or 5.56 per cent to $1.70; AMP down 5c or 4.13 per cent to $1.16; and Allied Farmers losing 5c or 5.75 per cent to 82c.

Fisher Funds-managed Kingfish, which invests in New Zealand stocks, had a 35 per cent drop in net profit to $56.93m on revenue of $63.17m, down 34 per cent, for the six months ending September. Kingfish recorded total shareholder return of 10.7 per cent, and is paying an interim dividend of 3.67c a share on December 17. Its share price was unchanged at $2.

Third Age Heath Services increased 5c to $2.90 after reporting a 12.5 per cent increase in net profit to $672,000 on revenue of $284m, up 3 per cent for the half year. It has no debt and is paying an interim dividend of 4.5c a share on December 10.

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