MARKET CLOSE: NZ shares rise, led by AMP, banks, Ebos

Wednesday 10th June 2009

New Zealand shares rose as news that U.S. banks are repaying federal bailout funds helped lift financials such as AMP and Australia & New Zealand Banking Group while a jump in Australian consumer confidence lifted companies that get revenue across the Tasman.

The NZX 50 Index rose 5.57, or 0.2%, to 2827.97, its second daily gain. Within the index, 22 stocks rose, 17 fell and 11 were unchanged. Turnover was $65.6 million, extending a subdued week of trading.

The U.S. Treasury yesterday said 10 lenders won approval to repay a total US$68 billion of taxpayer funds, giving them more freedom to set executive pay, hire workers and lend. American Express, which confirmed it was on the list, led a rally on the Dow Jones Industrial Average.

Insurer AMP led gainers on the NZX 50, climbing 4.4% to $6.40 as its ASX-listed shares gained. ANZ Bank climbed 3.4% to $21.50 and Westpac Banking rose 1.9% to $25.30.

Repaying the TARP money is “a huge positive signal,” said Ian Waddell, head of stock broking at McDouall Stuart. “Hopefully the flow-on effect will be to make easier access to capital.”

Still, New Zealand’s markets are further behind those in the U.S. and in Australia, where commodity companies are enjoying stronger prices this year, Waddell said. “I don’t think there’s an uptrend in place yet” in New Zealand, he said. “There’s going to be volatility going forward.”

The S&P/ASX 200 Index climbed 2.5% in Sydney after the Westpac Banking and Melbourne Institute sentiment index jumped 12.7% to 100.1, the first time since January 208 that optimists have outnumbered pessimists. Resource stocks rallied with commodity prices. BHP Billiton jumped 3.2% to A$37.68, while its planned partner in a Western Australia iron ore venture, Rio Tinto, rose 3.4% to A$73.

Among New Zealand stocks who garner revenue in Australia, Michael Hill International rose about 3% to 69 cents and building products firm Fletcher Building rose 1% to $6.89.

Ebos Group, a medical supplies distributor, climbed 3% to $5.15, bringing its gain this year to 16%. Of two analysts who follow the stock, one rates it a “buy” and the other has it at “outperform,” according to Reuters data.

Sky Network Television climbed 0.7% to $4.38 as Goldman Sachs JBWere’s head of asset management Stephen Walker singled the company out for favour at a meeting of financial advisers in Wellington today.

Sky has cemented its market position with the introduction of new products such as the PVR decoder and doesn’t have the dependence on advertising revenue that has pulled down rival media companies, Walker said.

Investors are awaiting Reserve Bank Governor Alan Bollard’s decision on interest rates when he announces his review of monetary policy at 9 a.m. tomorrow in Wellington. Bollard will cut the official cash rate by 25 basis points to a record low 2.25%, according to a Reuters survey. Still, economists are divided, with signs that the economy’s slump may be abating stoking speculation Bollard will leave the OCR unchanged to assess the impact of already low rates and fiscal stimulus.

Government figures today showed electronic card spending at New Zealand retailers rose last month, suggesting lower interest rates and tax cuts are beginning to revive consumer spending. Retail transactions on credit and debit cards rose 0.9% in May, following a 0.4% increase in the previous month, according to Statistics New Zealand.

“We expect to see growth in retail spending pick up a little further as the year progresses,” said Darren Gibbs, chief economist at Deutsche Bank. Still, a strong rebound isn’t expected with many consumers feeling less secure in their jobs and households reducing debt, he said.

Restaurant Brands, which is to join the NZX 50 Index, surged 6.2% to $1.03. Tourism Holdings, which is to exit the index, was unchanged at 49 cents.

Carpet maker Cavalier fell 5.3% to $1.80, the biggest decliner on the NZX 50 today.

Wellington Drive Technologies sank 9.1% to 15 cents after the maker of energy-efficient motors for ventilators and refrigerators, said sales and profit will miss its prospectus forecasts this year, reflecting lower-than-expected demand for refrigeration motors in Asia and Europe.

Businesswire.co.nz

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