MARKET CLOSE: NZ stocks gain as OCR cut to record, dollar falls

Thursday 29th January 2009

New Zealand stocks rose, pushing the NZX 50 Index higher for a fourth straight day, after the central bank cut its benchmark interest rate more than expected, trimming borrowing costs and driving the kiwi dollar lower. The NZX 50 rose 22.22, or 0.8%, to 2770.12 as at the 5 p.m. close of trading in Wellington. Within the index, 31 stocks rose, 12 fell and seven were unchanged. Turnover was NZ$113 million, the second day in a row that the value has exceeded NZ$100 million after a subdued January. NZX Ltd., the stock exchange manager, surged 13% to NZ$5.45 after announcing it was in advanced talk to sell its registry business TZ1 Registry to Markit, a global financial information services company headquartered in the UK. The acquisition is expected to complete in the first quarter of 2009, it said. Westpac Banking Corp. climbed 6.3% to NZ$20.30 and Australia & New Zealand Banking Group rose 4.6% to NZ$17 after bank stocks surged in Europe and the U.S. on optimism the U.S. government will step up efforts to restore financial markets sparked a global rally in bank stocks. Citigroup jumped 19% on the Dow Jones Industrial Average and Lloyds Banking Group soared 50% on the FTSE 100 Index in London. Reserve Bank Governor Alan Bollard cut the official cash rate a greater-than-expected 150 basis points to a record low 3.5% and hinted at more reductions to come as the global economy stumbles. Bollard�s move is seen driving deposit rates lower and making yield available from stocks more attractive, according to Rickey Ward, equities manager at Tyndall Investment management. Telecom Corp., the biggest phone company on the exchange, rose 2.3% to NZ$2.66. At today�s price, Telecom has a dividend yield of 16%, based on its past four quarters of payments. National Bank�s Thoroughbred Saver savings account offers 2.75% interest for amounts up to NZ$5,000. �With rates coming down the interest you can earn from putting your money into the bank is clearly a lot lower,� Tyndall�s Ward said. Investors are looking at companies �that can provide a better income than a fixed interest investment.� Telecom�s dividends are �expected to remain intact for a bit longer,� he said. Steel & Tube Holdings gained 5.2% to NZ$2.85 amid expectations demand for its products may revive as the government speeds up spending on infrastructure and interest rates fall. Fletcher Building, the nation�s biggest construction firm, rose 0.7% to NZ$5.52. The New Zealand dollar sank as low as 51.51 U.S. cents today as the currency�s yield premium diminished as rates fell. The rapid global economic decline means the bank has a �more negative outlook for the terms of trade and exports, and tighter credit conditions,� Bollard said today. Pay-TV operator Sky Network Television, whose equipment and programming costs are in U.S. dollars, rose 1.2% to NZ$4.10. Fisher & Paykel Healthcare, which gets 80% of its revenue in U.S. dollars, rose 0.3% to NZ$3.33. In Sydney, the S&P/ASX 200 Index rose 0.9% to 3526.2, with banks helped by the Federal Reserve�s announcement that it may support financial markets by buying longer-dated Treasury bonds and after President Barack Obama�s US$819 billion stimulus package was approved by the U.S. House of Representatives. It now goes to the Senate. National Australia Bank and BHP Billiton were among gainers. The Nikkei 225 Index rose 1.8% to 8251.24 in Tokyo. (Businesswire.co.nz)

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