NZ shares surge as rate cut prospect buoys yield plays; Mercury, Meridian hit records

The S&P/NZX 50 Index climbed 124.07 points, or 1.3 percent, to a record 9,698.89. Within the index, 31 stocks rose, 12 fell and seven were unchanged. Turnover was $163.5 million.

New Zealand's benchmark outperformed the rest of Asia, with China's Shanghai Shenzhen CSI 300 Index the next best performer, up 1 percent in afternoon trading. The local market had been tracking in line with Asia before the Reserve Bank held the official cash rate at 1.75 percent and said its next move would likely be a cut.

Lower interest rates are a boon for equities, boosting the attraction of companies offering stable dividends and providing easier credit to pursue merger and acquisition activity as a means to grow earnings. Swap rates and the New Zealand dollar tumbled as traders reassessed the chance of a lower benchmark interest rate.

"The market was meandering along and got caught out with regards to how the next move could potentially be down," said Peter McIntyre, an investment adviser at Craigs Investment Partners. "It certainly gave our market a good boost today - we're at record highs again - and we've seen good support for our yield plays."