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NZX 50 reaches record high before earnings

NZ NewswireNZ Newswire 9/08/2016 Jonathan Underhill
<span style="font-size:13px;">New Zealand shares rose, pushing the S&amp;P/NZX 50 Index to a new record, with dual listed banks Westpac and ANZ leading the charge.</span> © Hagen Hopkins/Getty Images New Zealand shares rose, pushing the S&P/NZX 50 Index to a new record, with dual listed banks Westpac and ANZ leading the charge.

New Zealand shares rose, pushing the S&P/NZX 50 Index to a new record on optimism the lack of profit warnings running into earnings season means companies are less likely to disappoint the market. ANZ, Westpac, Mercury NZ and Ebos Group led gainers.

The NZX 50 rose 14.86 points, or 0.2 per cent, to 7,363.16, bringing its gain this year to more than 16 per cent. Within the index, 23 stocks rose, 20 fell and eight were unchanged. Turnover was $122 million.

ANZ Bank rose 2.8 per cent to $28.27 on the NZX, mirroring its gains on the ASX, where its shares reached a 7-month high after the lender increased capital and said it didn't expect a blow-out in expenses for bad debts. Westpac rose 1.7 per cent to $33.14. Heartland Bank fell 1.4 per cent to $1.38.

Mercury gained 2.7 per cent to $3.10, leading gains among energy-related companies. Genesis Energy rose 0.9 per cent to $2.29 and Meridian Energy advanced 0.9 per cent to $2.92. NZ Refining gained 1.2 per cent to $2.58 and TrustPower rose 0.6 per cent to $8.22. Infratil, which has a controlling stake in TrustPower, rose 0.2 per cent to $3.385.

Stocks in the NZX 50 are currently trading at an average price-earnings ratio of 20, suggesting investors are bullish about the outlook. David Price, a broker at Forsyth Barr, says his firm sees "double-digit growth looking through next year."

"So we will need slightly more positive outlook statements to justify where the market is," he said. "Historically, the multiples we're trading at now appear expensive."

New Zealand equities continue to be one of the world's strongest-performing markets and that has underpinned offshore demand, especially for larger stocks, he said.

Kathmandu extended its gains, rising 1.6 per cent to $1.96.

Property for Industry gained 0.6 per cent to $1.67 after announcing that first-half distributable earnings 17 per cent as lower interest rates helped cut costs and lease reviews and new purchases lifted rental income.

PGG Wrightson fell 5.6 per cent to 51 cents after the rural services firm posted a 20 per cent gain in full-year profit, largely by paying less tax, while a weaker dairy sector contributed to a decline in sales.

Trade Me Group was the biggest decliner on the NZX 50, falling about 2 per cent to $4.92, and Orion Health Group dropped 1.5 per cent to $4.70.

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