MARKET CLOSE: NZX 50 rises to record, led by Xero, Nuplex as volatility abates

New Zealand shares rose to a record close, led by Xero, as investors returned to more risk-based equities after last week’s volatility. Nuplex gained after selling two of its Australasian assets, while Fletcher Building touched a 2014 low as analysts mulled yesterday’s earnings guidance.

The NZX 50 Index rose 46.576 points, or 0.9 percent, to 5279.699. Within the index, 35 stocks rose, 11 fell and four were unchanged. Turnover was $137 million.

Stocks rose across Asia as falling market volatility prompted investors to return to riskier equities after a period of risk aversion saw growth and momentum stocks sold in recent weeks. Japan’s Nikkei 225 index rose 1.8 percent in afternoon trading, while Hong Kong’s Hang Seng was up 1.3 percent and Australia’s S&P/ASX 200 index rose 1.1 percent.

“Most markets around the world got over-sold and have since bounced back very hard,” said Mark Lister, head of private wealth research at Craigs Investment Partners. “You would have seen those bargain hunters stepping back in anyway. The big question is does this bounce continue? It’s probably not the end of the volatility.”

Xero led the benchmark higher, climbing 5.4 percent to $16.76, and snapping four days of decline. Media reports today suggested the cloud-based accounting software firm, which is eschewing profit as it chases growth in the US growth, is advancing its plans to list in the US before the end of next year. The company is considering a listing, but wouldn’t comment any further.

“There has been media speculation that they are looking at a listing over in the US market,” Lister said. “It was also sold down very heavily over the past few weeks during the volatility, so it’s really borne the brunt of the selling off in the global markets.”

Spark New Zealand, formerly Telecom Corp, rose 0.9 percent to $2.96. Air New Zealand, the national carrier, climbed 3 percent to $1.915. Fisher & Paykel Healthcare, the breathing apparatus manufacturer and exporter, advanced 2.4 percent to a record close of $5.46.

Nuplex Industries rose 3.9 percent to $3.20 after the specialty chemicals maker agreed to sell two of its Australasian units to a company backed by Champ Private Equity for A$127.5 million, using the funds to repay debt and possibly make a capital return.

Fletcher Building, New Zealand’s largest listed company, fell 0.2 percent to $8.59, paring an intraday low of $8.41, the lowest its been since December last year. The Auckland-based construction and building materials company told shareholders at their annual meeting yesterday that full-year operating earnings in this financial year could rise between 4.2 percent and as much as 11 per cent to a range of between $650 million and $690 million. In New Zealand, the positive trend in residential housing consents in the second half of last year is expected to flow through to housing construction. However, in Australia, the outlook is more patchy with residential housing consents positive but non-residential less rosy.

“Overnight the analysts have crunched the numbers and haven’t been too favourable and that’s why there’s a bit of selling,” said Grant Williamson, director at Hamilton Hindin Greene. “Investors would have liked to see a bit more growth coming through. Australia is not helping. They’re expecting lower earnings from the Australian businesses so that does seem to be weighing a bit on the result.”

Vector was unchanged at $2.65. The Auckland lines company says falling electricity consumption will cost it up to $80 million because of the way it’s regulated, chief executive Simon Mackenzie told shareholders at its annual meeting today. It also updated shareholders about the recent Auckland power outage, which saw 85,000 Auckland households and businesses affected after a fire at the Penrose substation, saying the cause was still being investigated jointly with national grid operator Transpower and there would be no discussion of compensation.

Warehouse Group, New Zealand’s largest listed retailer, rose 0.3 percent to $3.10. James Pascoe, the retail group owned by David and Anne Norman, has boosted its holding the retailer to 6.3 percent from the 5.15 percent.

Outside the benchmark index, Seeka Kiwifruit Industries was unchanged at $2.94.The country’s biggest kiwifruit grower sees annual profit growth of up to 11 percent and is planning to expand its capacity in coming years as kiwifruit crops recover from the outbreak of the Psa-V vine disease. The Te Puke-based company forecasts net profit of between $2.6 million and $3 million in the 12 months ending Dec. 31, compared to $2.7 million in 2013, it said in stakeholder presentation slides published on the NZX.

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