MARKET CLOSE: NZX 50 snaps 3-day slide; AMP, Warehouse gain

Wednesday 11th March 2009

Shares snapped a three-day slide after upbeat comments from Citigroup's chief executive stoked a worldwide rally. AMP led the NZX 50 Index higher.

The NZX 50 rose 34.801, or 1.4%, to 2497.507. Within the index, 34 stocks rose, five fell and 11 were unchanged. Turnover was NZ$89.9 million.

AMP, Australia's biggest provider of pension plans, gained 6% to NZ$5.20 in the NZX, tracking its ASX-listed shares higher as Australian financial stocks rallied, driving the S&P/ASX 200 Index up 1.7%.

Citigroup, a major recipient of U.S. federal aid that's lost 95% of its value in the past six months, soared 36% after chief executive Vikram Pandit said the bank was profitable in the first two months of 2009, heading for the best quarter since 2007. The bank led a rally on Wall St. drove up shares in Europe and lifted Japan's Nikkei 225 Index by 3.8%.

"People are comforted when they can see at least one thing moving forward," said Angus Gluskie, who helps manage A$300 million at White Funds Management in Sydney. "The comments by the CEO gave them relief" though Pandit didn't make a full statement and his comments have to be treated with caution, he said.

Australia & New Zealand Banking Group climbed about 4% to NZ$17 on the NZX. Casino operator Sky City Entertainment Group rose 5.6% to NZ$2.66, trimming its slide this year to 17%. Pike River Coal, which is tapping investors more NZ$45 million to help fund tunnel repairs and for working capital, advanced 2.8% to 73 cents.

Fletcher Building, New Zealand's biggest construction company, climbed 2% to NZ$5.26 as real estate figures showed signs of life returning the to the market.

Home sales rose to 5,228 in February, climbing back from the record low 3,706 in January, according to the Real Estate Institute of New Zealand. That's still below the 6,356 homes sold in February 2008. The median house price rose to NZ$330,000 last month, from NZ$325,000 in January and is down from NZ$337,500 a year earlier.

The data suggests falling mortgage rates are luring investors back to the property market. Reserve Bank Governor Alan Bollard is poised to cut the official cash rate by 50 basis points to a record low 3% tomorrow, according to economist forecasts.

"February house sales are showing accumulating signs of stabilization," said Shamubeel Eaqub, economist at Goldman Sachs JBWere. "While the level of sales relative to population remains low by historical standards, improving mortgage approvals and stabilisation in sales is encouraging."

Warehouse Group, the biggest retailer on the NZX 50, rose 5.1% to NZ$3.52 and Fisher & Paykel Appliances gained 5.9% to 54 cents.

In Australia, BHP Billiton led a rally in resource companies as prices of metals rose on optimism China will continue to suck in raw materials. Copper jumped 3% and zinc climbed 3.3%. BHP gained 4.4% to A$30.58 and Rio Tinto climbed about 3% to A$49.74.

"People want to believe demand from China will continue", White Fund's Gluskie said. "Their views on what might happen going forward are predicated on the last three to four years, betting that will be replicated in the next couple of years," he said. "I would suggest there are significant risks" around that.

Japan's Nikkei 225 rebounded from a 26-year low as Citigroup's memo stoked optimism about banks worldwide. Consumer credit firm Credit Saison jumped 11%, Mitsubishi UFJ Financial Group, Japan's biggest lender, climbed 6.1% and insurer Mitsui Sumitomo gained 7.7%.

Businesswire.co.nz

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