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NZ shares rise as A2 Milk lifts guidance

NZ NewswireNZ Newswire 15/06/2016 Sophie Boot

New Zealand shares rose as A2 Milk Co raised its guidance and Spark continued to bounce back after being sold off on concerns about a Sky TV-Vodafone merger.

The S&P/NZX 50 Index advanced 34.6 points, or 0.5 per cent, to 6,869.56. Within the index, 23 stocks rose, 20 fell and seven were unchanged. Turnover was $186.2 million.

A2 Milk led the index, rising 12.7 per cent to $1.77, a one-month high, after the milk marketing company raised its full-year guidance and said it is well placed to cope with changes to infant formula regulations in China. A2's revenue is now forecast to be in a range of $350 million to $360m in the year ending June 30, from a previous forecast of $335m to $350m, the company said.

Michael De Cesare, an analyst at Nikko Asset Management New Zealand, said investor concerns about the regulatory regime in China had weighed on the stock.

"The market as a whole has been struggling with what seems to be a great long-term story caveated with quite complex and ever-changing regulation coming out of China in terms of food standard specifications and how that might impact on Australasian exporters of infant formula," De Cesare said.

Peter McIntyre, investment adviser at Craigs Investment Partners, said strong volume trading in the stock was confirmation that A2's story was intact, although continued global fears about the UK's upcoming European Union membership referendum could constrain its gains.

Spark gained 3.1 per cent to $3.51. It dropped sharply last week when Sky TV and Vodafone announced merger plans but continued to bounce back on Wednesday. Sky TV rose 1.2 per cent to $4.99.

Kathmandu Holdings advanced 2.8 per cent to $1.48, Orion Health Group rose 2.4 per cent to $4.71, and Fisher & Paykel Healthcare was up 2.3 per cent to $10.43.

Air New Zealand gained 1.9 per cent to $2.12. The airline will take part in Virgin Australia's planned A$852 million rights issue, even though it plans to offload the bulk of its stake to China's Nanshan Group.

NZX was the worst performer, dropping 2 per cent to $1.

Meridian Energy shed 2 per cent to $2.51, Auckland International Airport dropped 1.7 per cent to $6.29, and Tower fell 1.7 per cent to $1.45.

Outside the main index, Augusta Capital declined 0.9 per cent to $1.105. The listed property investor and fund manager has sold its Auckland Finance Centre for $96m, dependent on shareholder approval.

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