CLOSE: NZX 50 extends 10-month high; Fletcher, Mainfreight gain

Monday 3rd August 2009

Shares rose, pushing the NZX 50 Index to a new 10-month high amid signs the global economic slump is abating and investors are re-gaining their risk appetite. Fletcher Building led gainers, climbing to an 11-month high.

The NZX 50 rose 31.64, or 1%, to 3047.84 and has gained in 14 of the past 15 sessions. Within the index, 24 stocks rose, 14 fell and nine were unchanged. Turnover was $65 million.

Fletcher Building (NZX: FBU ) rose 3.1% to $7.40. Among signs of revival in world growth, The CLSA China Purchasing Managers’ Index rose it its highest level in a year last month, Australian manufacturing shrank at its slowest pace in 10 months and TVNZ’s Colmar Brunton poll showed New Zealand consumer confidence climbed to its highest level in more than seven years.

Fletcher is rated ‘outperform,’ based on the average of eight recommendations collated by Reuters.

Mainfreight (NZX: MFT ) rose 2.2% to $4.65, the highest since May 27. Managing director Don Braid told shareholders at their annual meeting that the transport company is making “steady gains in reducing costs and improving margins” though sales volumes have been impacted by slowing economies.

Telecom Corp (NZX: TEL ), the biggest company on the index, rose 1.8% to $2.83.

“The last few weeks have been reasonably buoyant – I think people are seeing some opportunities” in the market,” said Mark Peterson, managing director of Direct Broking. “People are starting to feel a bit more bullish.”

Companies, though, still face headwinds, he said. The New Zealand dollar climbed as high as 66.50 U.S. cents today, adding to the drag on exporters’ earnings.

Sanford Ltd (NZX: SAN ) slipped 0.9% to $5.25. The fishing company was rated ‘sell’ by Goldman Sachs JB Were analyst Adrian Allbon, according to the ShareChat website. His 12-month target price is $5.05.

Also this week, government figures are expected to show the jobless rate rose to a seven-year high 5.6% in the second quarter as companies and government departments shed jobs to cut costs.

Westpac Banking Corp (NZX: WBC ) climbed 2.2% to $28, mirroring gains in lenders on the ASX.

Australia & New Zealand Banking Group (NZX: ANZ ) rose 1.7% to $24.01. The owner of New Zealand’s biggest banking group will pay about A$1.1 billion to buy branches in six Asian countries from Royal Bank of Scotland Plc, the Australian Financial Review reported.

ING Property Trust (NZX: ING ) rose 2.9% to 71 cents and children’s clothing chain Pumpkin Patch (NZX: PPL ) gained 2.5% to $1.64.

Sky City Entertainment Group (NZX: SKC ) rose 2% to $3.36, the highest close since Oct. 3. Shares of the casino and hotel group have soared since its July 21 announcement that net profit was a higher-than-forecast $113 million to $116 million in the year ended June 30.

Outside of the NZX 50, Life Pharmacy (NZX: LPL ) soared 67% to 60 cents after announcing an offer to acquire rival Pharmacybrands Ltd. in an all-share proposal that values the target at about $20 million. The issue price will be 49.1 cents a share and Life Pharmacy will buy back partly paid shares and make a taxable bonus issue prior to the share swap.

Sealegs Corp (NZX: SLG ) rose 7.4% to 14 cents after the manufacturer of amphibious boats said it won an order from the Malaysian Fire Department for eight marine craft for national flood rescue operations. Malaysia is a repeat buyer, having first deployed Sealegs vessels in last year.

Businesswire.co.nz

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