NZX CLOSE: Shares rise on global optimism; Michael Hill gains

Monday 24th August 2009

New Zealand shares rose, joining a global rally amid signs the worst of the recession has passed and investors were encouraged by record earnings from China’s biggest oil refiner. Michael Hill International led gainers on the eve of its profit announcement and New Zealand Refining extended its gain from a four-year low.

The NZX 50 Index gained 32.72, or 1.1%, to 3067.67, the first gain in three sessions. Within the index, 34 stocks rose, nine fell and seven were unchanged. Turnover was $109 million.

Michael Hill (NZX: MHI ), the jewellery chain that counts Australia as its largest market, jumped 7.5% to 72 cents. Profit before one-time items may fall 34% to $28 million, according to Forsyth Barr, though earnings from Australia, which has skirted recession, may be stronger than expected. The S&P/ASX 200 Consumer Discretionary Index surged 3% in Sydney today.

Pumpkin Patch (NZX: PPL ), the children’s clothing chain that counts Australia as its biggest market, rose 2.8% to $1.84.

NZ Refining (NZX: NZR ), which earns a fee on the amount of oil is processes, climbed 5.8% to $5.50. China Petroleum & Chemical Corp., Asia’s biggest refiner, posted record quarterly earnings today.

Westpac Banking Corp (NZX: WBC ) jumped 4.4% to $28.60 and Australia & New Zealand Banking Group (NZX: ANZ ) rose 4.3% to $24.10, mirroring a rally in Australian banking stocks on the ASX.

Shares rallied across Asia, with Japan’s Nikkei 225 Index climbing 3.3% in early afternoon trading and Australia’s S&P/ASX 20 Index rising 3%. BHP Billiton, the world’s biggest mining company, gained 3.9% on the ASX as prices of copper and oil rose.

Among events lifting sentiment for equities, U.S. home sales climbed more than expected at Federal Reserve chairman Ben Bernanke gave an upbeat appraisal of the global economy.

“We’re all comforted that we’re well away from the prospects of very serious recession but there’s still a lot of hurdles,” said Angus Gluskie, who manages about A$360 million at White Funds Management in Sydney.

“We’ve had a succession of small positives out there,” he said. “The big question is how far and fast the fundamental recovery can develop from here.” Among unknown factors are the impact of higher unemployment and the eventual removal of global stimulus measures by governments and central banks, he said.

Tower Ltd (NZX: TWR ) slipped 3.9% to $1.74 after the insurer and fund manager said it will raise $81.3 million through a fully underwritten rights issue at a 26% discount to its trading price on Friday. Tower will offer five new shares for every 16 held at a price of $1.34 apiece it an issue underwritten by Goldman Sachs JBWere. Guinness Peat Group (NZX: GPG ), which indirectly owns 34.9% of Tower, plans to take up its entitlement. GPG was unchanged at 80 cents.

NZ Farming Systems Uruguay (NZX: NZS ) fell 6.3% to 45 cents, the biggest decline on the NZX 50.

Pike River Coal (NZX: PRC ), which is forecast to report a full-year loss of $13 million this year on mine development costs, fell 0.9% to $1.14.

APN News & Media (NZX: APN ), publisher of the New Zealand Herald, gained about 6% to A$1.77 on the ASX after rival Fairfax Media said the decline in advertising revenue “appears to have bottomed.” APN was unchanged at $2.18 on the NZX. Fairfax climbed 3.6% in Sydney.

NZX Ltd (NZX: NZX ), the stock exchange operator, fell 0.3% to $7.65 after releasing a report that it is willing to shed a range of current regulatory duties in the interests of market efficiency and reputation, but not before the Securities Act is rewritten.

Fisher & Paykel Healthcare (NZX: FPH ), the respiratory products manufacturer that gets 80% of its revenue in U.S. dollars, fell 1.8% to $3.30 as the kiwi dollar climbed to an 11-month high.

The New Zealand dollar recently traded at 68.36 U.S. cents and economists and strategists predict it will break 70 cents this week, according to a BusinessWire survey.

Businesswire.co.nz

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