MARKET CLOSE: NZ shares fall; Meridian, MRP, DNZ drop on weakening yield demand

New Zealand shares fell, led by Meridian Energy and MightyRiverPower as demand abated for companies with dependable dividend streams. Warehouse Group rose ahead of reporting its earnings this week.

The NZX 50 Index fell 19.579 points, or 0.3 percent, to 5874.082. Within the index, 22 stocks fell, 19 rose and nine were unchanged. Turnover was $156 million.

Overnight bond yields rally, as investors bet on the US economy recovery and the Federal Reserve lifting interest rates in the world’s largest economy sooner rather than later. The local bourse has gained 5.8 percent since the start of the year, as traders sought income paying equities, like utility companies and property investors, in a low interest rate environment.

Meridian dropped 2.5 percent to $2.13. MRP fell 2.4 percent to $3.30. DNZ Property Fund declined 2 percent to $1.94. Goodman Property Trust slipped 1.3 percent to $1.17.Precinct Properties New Zealand fell 0.8 percent to $1.19. Kiwi Property Group decreased 0.8 percent to $1.315.

“New Zealand has had a great run as a market as people have sought high yielding equities globally,” said Shane Solly, director at Harbour Asset Management. “We’ve got a market that tends to be relatively low, because of the waiting we have to the gen-tailers in particular, we tend to have quite a low earnings growth environment so certainly the market is being priced at quite high levels to that earnings growth.”

Warehouse was the best performer on the day rising 2.8 percent to $2.90. New Zealand’s largest listed retailer is due to report its financial statements this Friday, after flagging unseasonal weather hit pre-Christmas sales. James Pascoe, the investment group owned by the Norman family, lifted their stake to 16.4 percent yesterday, buying out Australian grocery store chain, Woolworths 8.8 percent stake.

“It shores up the register it doesn’t necessarily mean that profitability is going to improve but does sure up the share register,” Solly said.

Spark New Zealand, formerly Telecom Corp, was unchanged at $3.29 after announcing it has agreed to sell its Telecom Rentals business for $106 million to Australian financial services company FlexiGroup.

NZX rose 0.9 percent to $1.16. The stockmarket operator said the volume and value of cash trading on New Zealand’s share market rose last month, snapping a decline a month earlier, and helped push the value of the local equity market above $100 billion.  Separately, it named First NZ Capital as the first brokerage to agree to be a market maker for its yet-to-be-launched NXT market for small and medium-sized companies.

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