Led by A2 Milk Co, the New Zealand share market rose after $40 million was raised in a share placement. It jumped to 78 cents to aid the funding for the development of its infant formula products. According to the Grant Williamson, Director at Hamilton Hindin Greene, there are some disappointed investors who were not able to join or got scaled since the placement got away very easily.
The energy companies which include Contact Energy, Meridian Energy and Mighty River Power (MRP) advanced too. Williamson said that the demand for electricity generators has certainly come in again and he thought that investors are going to chase yields . Contact Energy rose by 1.3 percent while Meridian rose by 0.5 percent and MRP went higher by 0.4 percent.
Companies which are paying higher dividends but at a low interest rate make it more attractive and the yield stocks grow in the local trade.
When the United States Federal Reserve announced that they were going to increase interest rates after running a near zero policy because of the financial crisis, traders pushed out their expectations. Some investors are attracted to low interest companies and yield stocks rather than higher interest rate companies. But the US share market rose again when the investors decided that the US Fed will not move interest rates anytime soon which makes the equity market underpinned, according to Williamson.
Markets across Asia followed the Wall Street higher.
The S&P/NZX 50 index climbed by 0.2 percent. There were 23 stocks that climbed up the ladder while 19 went down and 8 remained the same. The turnover was $190 million.
Breathing apparatus manufacturer and exporter Fisher and Paykel Healthcare went down by 0.9 percent whereas an outdoor goods retail chain store moved down by 2.7 percent.
The greenback is up against the Kiwi Dollar which is heading to rise by 3.7 percent this week. The stronger currency weighs on the foreign earnings of exporters.
Spark New Zealand climbed by 1.8 percent while Fletcher Building, a supply firm for construction and building, rose by 1.3 percent.
However, the cloud-based accounting software company Xero went down the benchmark index by 3 percent. Xero is an accounting software for small business which stores data via cloud or the internet.
Even if there are low performers on the market at the present, it won't stay that way since investors are always looking for new markets which they think are improving. There are things that need consideration to gain market share like the US Federal Reserve. If they take the interest higher, they might lose some of their former investors who will move to low interest and yield stocks. There are investors who are considered bargain hunters who will invest in yield stocks.
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Metherell, S. (2015, October 9). MARKET CLOSE: NZ shares rise, led by A2 after $40M placement. Retrieved October 9, 2015, from http://www.scoop.co.nz/stories/BU1510/S00332/market-close-nz-shares-rise-led-by-a2-after-40m-placement.htm