CLOSE: NZX 50 rises to 9-month high; Fletcher Building gains

Thursday 23rd July 2009

New Zealand shares rose to a nine-month high, as better-than-expected U.S. corporate earnings embolden investors to put funds into equities. Carpet marker Cavalier Corp., Fisher & Paykel Appliances and Fletcher Building led gainers.

The NZX 50 rose 18.19, or 0.6%, to 2918.63, the eighth straight gain. Within the index, 22 stocks rose. 10 fell and 15 were unchanged. Turnover was $108.3 million.

Cavalier (NZX: CAV ) gained 6% to $2.12, leading the index higher. F&P Appliances (NZX: FPA ) rose 4% to 78 cents and Fletcher Building (NZX: FBU ) advanced 3.5% to $7.14, the highest since Oct. 2.

Per-share earnings in the US are beating forecasts by 11% on average, based on the 11% of the 105 companies in the Standard & Poor’s 500 Index that reported earnings since July 8, Bloomberg said yesterday.

New Zealand’s second-quarter results begin flowing next week, with investors likely to focus on the outlook and the prospects of a pickup in the economy.

“We expect the recovery to be assisted by a modest pick-up in private consumption, continued growth in public spending and a rebound in residential building,” said Darren Gibbs, economist at Deutsche Bank. He forecasts the economy will expand 2.4% in 2010 after shrinking 2% in 2009.

Growth will “remain soft” in the near term as companies reduce inventory and keep spending in check, he said.

Auckland International Airport (NZX: AIA ) rose 1.9% to $1.64 after the nation’s busiest gateway announcing a joint venture with Accor Hospitality and Tainui Group Holdings to build and operate a new four-star, 260-room Novotel hotel, in time for the 2011 Rugby World Cup. AIA is trying to maximize returns from its property holdings and a hotel has been mooted as part of a medium-term growth strategy.

PGG Wrightson (NZX: PGW ) fell 4.1% to 94 cents after Craig Norgate stood down as chairman, in favour of Keith Smith, who isn’t aligned to a major shareholder. Norgate’s Rural Portfolio Investments, which he owns with Baird McConnon holds 27.5% of Wrightson.

NZ Farming Systems Uruguay (NZX: NZS ), the South American dairy farmer part-owned by Wrightson, fell 3.9% to 49 cents. Norgate said today he will retain his directorship of NZ Farming Systems, whose chairman is Keith Smith.

Air New Zealand (NZX: AIR ) climbed 3% to 98 cents and Kiwi Income Property Trust (NZX: KIP ) rose 2% to 96 cents.

Infratil Ltd (NZX: IFT ), the investment group that controls TrustPower, climbed 1.7% to $1.77. The company’s manager, HL Morrison & Co., today said the Guardians of New Zealand Superannuation had confirmed its commitment to invest $100 million in its Public Infrastructure Partnership Fund, or PIP.The fund, which will pursue PPP-style deals with government agencies to invest in what it called social infrastructure facilities, will initially have $500 million.

Fisher & Paykel Healthcare (NZX: FPH ) extended its gains, rising 1.6% to $3.12, amid speculation it stands to benefit from higher sales of its breathing masks and respirators because of the swine flu pandemic.

Businesswire.co.nz

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