MARKET CLOSE: NZX 50 rises 2%; Farming Systems, Nuplex gain

Wednesday 4th March 2009

New Zealand's NZX 50 Index jumped 2%, making it a stand-out in Asia today, as companies hardest hit in the past few weeks rallied. NZ Farming Systems Uruguay led the advance after milk powder prices rose.

The NZX 50 rose 51.397 to 2469.343, rising from the five-year low reached yesterday. Within the index, 32 stocks rose, 13 fell and five were unchanged. Turnover was NZ$59.4 million.

The rally on the New Zealand bourse contrasts with the performance of Australia's S&P/ASX 200 Index, which fell 1.6% to 3168.8 after government figures showed that economy unexpectedly contracted in the fourth quarter. In Tokyo, the Nikkei 225 Index rose 0.6% to 7274.46. In the U.S. overnight, the Dow Jones Industrial Average fell 0.6%.

NZ Farming Systems soared 11% to 50% after the price of milk powder rose 16.6% in Fonterra Cooperative Group's latest online auction, the first recorded increase on the trading system. Farming Systems has tumbled 25% this year. Nuplex Industries, which has flagged a possible capital raising after a breach to its lending covenants, gained 5.8% to NZ$1.10.

"People have been looking at stocks that have been beaten up the most, pulling things apart to work out what they could mean," said Paul Robertshawe, equities manager at Tower Asset Management.

Nuplex's management team "is solid and the business is OK. It's probably worth more than NZ$1.10," he said. While it has equity-raising risk hanging over it, some people have decided "there's enough bad news in the price."

For the farming sector, "we're pretty close to the bottom in dairy prices - maybe that helps Farming Systems and PGW," Robertshawe said.

PGG Wrightson, the nation's biggest rural services company, was unchanged at 95 cents, having sunk 26% this year. Rakon jumped 9.5% to 69 cents, having tumbled 50% this year on concern demand will wane in markets in Europe and the U.S.

Australia's economy edged closer to recession after the first contraction in eight years amid weakening exports and waning demand for housing. Consumer spending made no contribution to growth, according to the figures.

Michael Hill International, the jeweler that counts Australia as its biggest market, fell 2% to 46 cents and has slid 7.8% this year. Also weighing on the stock, eftpos network operator Paymark today said electronic transactions fell last month, led by a drop in big-ticket purchases and luxury items.

There were about $3.25 billion of electronic transactions across Paymark's network in February, down 2.2% from a year earlier.

Fletcher Building, the nation's biggest construction company, gained 2% to NZ$5.26. The company briefed institutional investors as part of a presentation at Goldman Sachs and "spoke a reasonably positive story in the light of a very challenging environment," said Ricky Ward, fund manager at Tyndall Investment Management.

Fletcher stock is down 10% this year.

Tourism Holdings fell 3.9% to 50 cents, leading the NZX 50. The campervan operator has tumbled 22% this year amid weakening demand from tourists in the face of the global economic downturn. Air New Zealand fell 2.6% to 76 cents.

Carpet maker Cavalier Corp. fell 1.7% to NZ$1.15, taking its decline this year to 33%.

Tower's Robertshawe said the downturn in demand in the housing market has trimmed demand for carpets. Companies like Cavalier and Tourism Holdings have fixed costs and dwindling sales creates an "earnings hole," he said.

Contact Energy pared an earlier gain to end the session up 0.4% to NZ$5.51. It reached NZ$5.65 in intraday trading. The biggest utility on the NZX 50 has continued to shed customers, according to figures today.

Contact lost another 3,382 electricity customers in January, taking the total back to 506,635, according to the latest Electricity Commission statistics. That means Contact lost 22,471 electricity customers - a little over 4% of its customer base - in the four months since Sept. 30, when total electricity customers peaked at 529,106.

That was just before Contact announced 11% tariff increases in the South Island and Wellington, and a doubling of the directors' fee pool just as the world economy crashed, and within weeks of the general election.

Businesswire.co.nz

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