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NZ shares rally on A2 Milk forecast

NZ Newswire logoNZ Newswire 26/04/2017 Jonathan Underhill

New Zealand shares rose on Wednesday, joining a global rally with A2 Milk, Fletcher Building and Tegel Group all up. © DINUKA LIYANAWATTE/Reuters New Zealand shares rose on Wednesday, joining a global rally with A2 Milk, Fletcher Building and Tegel Group all up. New Zealand shares rose on Wednesday, joining a global rally.

A2 Milk was up after raising its full-year revenue guidance, Fletcher Building and Tegel Group climbed from their recent lows and Spark rose on demand for its attractive yield.

The S&P/NZX 50 Index gained 112.2 points, or 1.6 per cent, to 7335.14. Within the index, 33 stocks gained, 14 fell and three were unchanged. Turnover was $272 million, including $122 million in Spark shares.

Shares rose on Wall Street, with the Nasdaq Composite Index reaching a record high, and key equity benchmarks rose across Asia as investors responded to what's seen as a market-friendly presidential election outcome in France and US President Donald Trump's imminent announcement on corporate tax cuts.

"There's a risk-on feel to it," said Greg Smith, head of research at Fat Prophets in Auckland.

A2 led the index higher, rising 7.8 per cent to a record $3.45 after the milk marketer forecast revenue of $525 million in the year ending June 30, up from $352.8 million a year earlier.

A2 generated sales of $388m in the nine months ended March 31, with third-quarter sales of its infant formula, popular in China where rules have been tightened for internet sales, exceeding expectations.

"The changes we saw in China - it's all about rationing the number of brands available and improving the quality," Mr. Smith said. "A2 shouldn't be too scared if they are one of the brands."

Fletcher gained 3.8 per cent to $8.31, having sunk to a 12-month low last week on the back of an earnings downgrade. Tegel, whose shares have been punished in the face of a glut of product and rivalry from Australia's Ingham's, gained 2.6 percent to $1.17.

Spark rose 1.8 per cent to $3.675 and Mr. Smith said it may be a beneficiary of Australian investors deeming that market as becoming overcrowded with telcos and being drawn to its yield of over 6 per cent.

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