MARKET CLOSE: Shares rise; Telecom, THL, Contact gain

Wednesday 29th April 2009

Shares rose in the heaviest trading day since August 19, amid signs of a revival in business confidence, stronger merchandise trade and expectations the central bank will cut its key interest rate to a record low tomorrow.

The NZX 50 gained 13.27, or 0.5%, to 2699.71, its third daily gain. Within the index, 21 stocks rose, 17 fell and 12 were unchanged. Turnover was $145 million, the highest this year.

Telecom, the largest company on the index, rose 0.4% to $2.72, a six month high, as 15.4 million shares changed hands. The phone company has sought to move to the front foot this week, announcing the start of its new 3G mobile network a month early and proposing that its Chorus unit take a key roll in the government’s broadband strategy. The stock is up 18% this year.

Tourism Holdings rose 6.4% to 50 cents, leading the index higher as the Ministry of Tourism released figures showing spending by domestic travelers increased 6.2% to $8.1 billion last year holiday travelers lifting spending by 4% to $3.2 billion.

Steel & Tube Holdings, which supplies steel building materials, climbed 4.9% to $2.78.

Business confidence this month had its biggest bounce back since December 2000, according to the latest National Bank Business Outlook. The net number of pessimists shrank to 15% from 39% in March, while companies’ own activity had the biggest turnaround in 16 years, with a net 4% now expecting conditions to worsen over the next year, down from 21% negative in March.

“The first step towards recovery is finding a floor,” said Cameron Bagrie, National Bank’s chief economist. “If indeed this gains momentum over the coming months, then attention will turn towards the quality and magnitude of any pending recovery,” he said.

Contact Energy, the biggest utility on the index, rose 4% to $5.78, trimming its slide this year to 24%. Freightways, which operates freight and courier delivery companies, gained 2.9% to $2.80.

Government figures today showed New Zealand exports exceeded $4 billion for the first time in March, reflecting the sale of an aircraft and an increase in shipments of meat.

Exports climbed 18% to $4.04 billion last month, according to Statistics New Zealand, underpinning optimism the economic slump has bottomed out. The number includes an aircraft valued at $128 million, while meat exports rose 26% to $606 million. The gain in exports last month outpaced imports which rose 6.9% to $3.72 billion, resulting in a trade surplus of $324 million, the largest for March since 2002. The annual trade deficit narrowed to $4.8 billion.

Both exports and imports “were considerably stronger than market expectations,” said Darren Gibbs, chief economist at Deutsche Bank in Auckland. “Net exports seem likely to have made a positive contribution to growth in Q1, offsetting some of the weakness seen in domestic demand.”

PGG Wrightson, the nation’s biggest rural services company, climbed 0.8% to $1.28, trimming its decline this year to 1.6%, amid signs the agricultural sector is becoming more upbeat. Fonterra this week raised its milk fat payment forecast by 10 cents to $5.20 a kilogram, buoying optimism payments aren’t about to fall in a hole, while today’s trade figures showed meat exports rose 26% to $606 million last month.

NZ Farming Systems Uruguay slid 12% to 60 cents, adding to yesterday’s slide after forecasting a wider full-year loss because of the impact of drought on milk production in the South American nation.

Australia & New Zealand Banking Group fell 7.7% to $19.75, after Australia’s fourth-largest lender posted a 28% drop in first-half profit as bad debts surged. Net income fell to A$1.42 billion while the lender’s credit impairment charge soared 98% to A$1.44 billion. ANZ National Bank, the wholly owned subsidiary and largest banking group in New Zealand, reported a 59% decline in net profit to $168 million.

Businesswire.co.nz

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