NZX CLOSE: NZ shares gain as business confidence climbs; PGW, AIR rise

Tuesday 6th October 2009

New Zealand shares rose for the first day in three after business confidence jumped to a 10-year high, adding to evidence the economy is recovering from recession. PGG Wrightson and Air New Zealand led the advance.

The NZX 50 climbed 12.82, or 0.4%, to 3151.54. Within the index, 28 stocks rose, 13 fell and nine were unchanged. Turnover was $74 million.

Stocks gained after the New Zealand Institute of Economic Research's Quarterly Survey of Business Opinion showed a net 36% of firms were upbeat about current business conditions, a turnaround from the June quarter, when a net 25% were gloomy. They expect the slide in earnings will abate in the fourth quarter.

“A solid rise in business confidence is another piece of evidence pointing to the economy strengthening,” said Philip Borkin, economist at ANZ National. Still, “there is a large disconnect between what firms are experiencing andtheir future expectations. Employment and investment intentions remain subdued, although at a less extreme level.”

PGG Wrightson, the nation’s biggest rural services company, gained 5.1% to 62 cents. New Zealand Refining rose 3.4% to $4.86 and Fisher & Paykel Appliances gained 3.1% to 67 cents.

Air New Zealand climbed 4.1% to $1.26 after the kiwi dollar plunged against the Australian dollar, which may encourage more tourists to visit from New Zealand’s biggest source of visitors. The kiwi dollar fell after the Reserve Bank of Australia lifted its benchmark interest rate, boosting its currency.

Tourism Holdings, the campervan rental company, climbed 4.5% to 70 cents.

Skellerup Holdings climbed about 2% to 52 cents. The manufacturer of rubber goods and milking equipment raised its target $21.54 million through a two for five rights issue which closed on Oct. 1, with investors seeking to buy $24 million of shares. The funds will be used to repay bank debt, strengthen the balance sheet and provide funds for growth, said managing director Donald Stewart.

New Zealand Oil & Gas gained 2.4% to $1.70. The oil and gas company’s shares could more than double if its four new wells are all a success, according to McDouall Stuart head of research John Kidd, who rates the company a ‘buy.’ He said there was “the genuine prospect of very significant exploration-led upside" from the planned wells.

Telecom Corp. slipped 1.2% to $2.58. The phone company is losing the net gain from providing basic services to isolated customers under government changes to the funding of rural broadband services.

ING Property Trust rose 1.3% to 80 cents after the company announced the sale of two properties for a combined $8.6 million, in line with their March 31 valuations. The sales bring total disposals so far in the 2010 financial year to 10 properties worth $57.5 million.

Businesswire.co.nz

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