MARKET CLOSE: NZ shares gain; Telecom lifts on Chorus, Sky City gains

Thursday 25th June 2009

New Zealand shares rose, sending the NZX 50 Index to its biggest gain since June 3, as global confidence about a recovery from recession lifted equity markets, and as Telecom Corp. gained on its negotiations over $3 billion of lines contracts.

The NZX 50 rose 30.85, or 1.1%, to 2770.65. Within the index, 25 stocks rose, 14 fell and 11 were unchanged. Turnover was $81.8 million.

Shares rose across Asia after the Federal Reserve said the U.S. economic slump is abating, the OECD predicted a milder track for its member economies this year and South Korea forecast a 1.5% contraction in GDP this year, less than its previous pick of 2%. The Kospi Index jumped 2.7% to 1401 in early afternoon trading, while Japan’s Nikkei 225 Index climbed 2.9% to 9866.95 and Australia’s S&P/ASX 200 Index climbed 1.29% to 3856.

“The balance of the information flows remains positive,” said Stephen Walker, head of asset management at Goldman Sachs JBWere. “We’re talking about a fairly muted longer-term recovery.” There’s a stronger short-term bounce as companies readjust inventory levels, with some possibly having cut back too far, he said.

Fletcher Building (NZX: FBU ), the nation’s biggest construction company, rose 0.6% to $6.39 and Steel & Tube Holdings (NZX: STU ), which distributes steel building materials, climbed 1.4% to $2.94.

Telecom (NZX: TEL ) jumped 3.5% to $2.67 after the biggest company on the NZX 50 said its Chorus unit, which manages its local network, will bring a third contractor, Visionstream in to share network maintenance and installation work with Transfield Services and Downer EDi Engineering.

Sky City Entertainment Group (NZX: SKC ) rose 4.6% to $2.74, leading the index higher. Four of nine analysts who follow the stock now rate it a ‘buy,’ with the consensus at ‘outperform.’

NZ Farming Systems Uruguay (NZX: NZS ) rose 4.3% to 49 cents as an analyst at Rabobank said intervention buying of dairy products by China, the U.S. and the EU would help underpin prices in a weak global market. The three combined bought almost 200,000 tonnes of milk powder in the first quarter, about 25% of normal trade volumes for that period, according to analyst Hayley Moynihan.

Fisher & Paykel Healthcare (NZX: FPH ) rose 2.1% to $2.93 and clothing retailer Hallenstein Glasson Holdings (NZX: HLG ) climbed 2.1% to $2.45.

Contact Energy (NZX: CEN ), the biggest utility on the NZX 50, fell 1.2% to $5.71 after First NZ Capital analyst Jason Lindsay lowered his forecast for 2009 operating earnings by $26 million to $455 million, reflecting lower wholesale electricity prices, fewer gas and electricity customers and higher operating costs. He rates the stock “outperform,” the ShareChat website reported.

Retailer Smiths City Group (NZX: SCY ) fell 2.5% to 39 cents, with just 4,000 shares changing hands, after reporting annual profit tumbled 72% to $1 million. Chairman Craig Boyce said the company’s three market segments, big ticket retail, customer financing and property market had all “been adversely affected by market factors.”

Figures tomorrow may show New Zealand GDP shrank 0.7% in the first quarter, an improvement from the 0.9% contraction in the final three months of 2008. Figures today showed the quarterly current account deficit shrank to the smallest since 2004 in the first quarter as the worst recession in 30 years crimped demand for imports and global oil prices declined.

Foodmaker Goodman Fielder (NZX: GFF ) declined 1.8% to $1.63 and Rakon Ltd (NZX: RAK ). slipped 1.4% to $1.43. Transport company Mainfreight Ltd (NZX: MFT ) fell 0.9% to $4.25 while Freightways Ltd (NZX: FRE ) fell 0.4% to $2.83.

Businesswire.co.nz

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