CLOSE: NZ stocks rally for 10th day; FPA and FPH lead climb

Monday 27th July 2009

New Zealand shares rounded out their 10th session of gains, pushing the NZX 50 toward 3,000 for the first time since early October, as investors take heart from better-than-expected U.S. earnings and optimism the worst of the recession has abated.

Guinness Peat Group, Fisher & Paykel Appliances and Fisher & Paykel Healthcare led gainers.

The NZX 50 rose 36.83, or 1.2%, to 2998. Within the index, 28 stocks rose, 11 fell and nine were unchanged. Turnover was NZ$83.9 million.

Guinness Peat (NZX: GPG ) jumped 7% to 76 cents and F&P Appliances #NZX: FPA ) rose 3.6% to 86 cents. F&P Healthcare (NZX: FPH ) climbed 2.9% to NZ$3.19.

The rally on the local bourse mirrors the advance in overseas benchmarks such as the Dow Jones Industrial Average, which climbed above 9,000 last week for the first time since January. Across Asia today, the Nikkei 225 rose 1.5% to 10088.66 in early afternoon trading while the S&P/ASX 200 gained 1.2% to 4139.60.

“Investors recognise stocks are cheap on a longer-term basis so they search for evidence that it’s a good time to buy,” such as better than expected earnings, said Angus Gluskie, principal at White Funds Management in Sydney. “Let’s not forget expectations were particularly low,” he said. “With the rally over the last two weeks, the market probably is stretched again,” said Gluskie, who predicts “a gradual recovery punctuated by optimistic spurts up.”

Air New Zealand (NZX: AIR ), which reported a continued decline in passenger volumes last week, slipped 1% to 98 cents.

Sanford Ltd (NZX: SAN ), the biggest fishing company on the NZX, rose about 1% to $5.25 after it agreed to acquire mussel farms from Sealord Group for $23.4 million, adding to its capacity to produce the shellfish in the Marlborough Sounds. The purchase “will give us access to increased growing space for greenshell mussels, of approximately 5,000 tonnes per annum,” Sanford said.

New Zealand consumers became less pessimistic about the economic outlook this month, according to a survey by Roy Morgan Research. The survey showed people expecting the economy to deteriorate over the next 12 months fell to 41%, the lowest since March 2009. Some 31% expect the economy will improve.

Telecom Corp (NZX: TEL ), the largest company on the NZX 50, rose 2% to $2.86.

New Zealand Refining (NZX: NZR ) extended its gains, rising 2% to $7.65, adding to a 4.9% jump on Friday, when Bloomberg reported that U.S. refiner Valero Energy Corp. is considering a bid for all or part of the refining company. As much as 36% of the refinery may be up for sale, as Shell NZ and Exxon Mobil consider selling their stakes.

Clothing chain Hallenstein Glasson Holdings (NZX: HLG ) rose 1.9% to $2.65. NZ Farming Systems Uruguay (NZX: NZS ), which develops dairy farms in South America, extended its slide, dropping 4.2% to 46 cents, the biggest decline on the NZX 50. The shares have shed 20% this year as global dairy prices weakened.

Businesswire.co.nz

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