NZX CLOSE: NZ shares gain with global optimism; Fletcher rises

Wednesday 16th September 2009

New Zealand shares rose, joining a global rally, as stronger-than-expected U.S. retail sales, upbeat comments from Federal Reserve chairman Ben Bernanke and comments from Warren Buffet that he’s buying equities helped stoke optimism.

The NZX 50 Index rose 17.95, or 0.6%, to 3117.58, the first gain in three days. Within the index, 18 stocks rose, 19 fell and 13 were unchanged. Turnover was $89.9 million.

Shares gained on Wall Street and in Europe and continued into Asia, where Hong Kong’s Hang Seng was up 1.8% in early afternoon trading and Singapore’s Straits Times Index rose 1.3%. Australia’s S&P/ASX 20 Index was 2.4% higher in late trading.

Fletcher Building Ltd (NZX: FBU ), the nation’s biggest construction company, rose 2.8% to $8.18, the highest close since May 2008. The shares are rated ‘outperform’ based on the consensus of eight analyst recommendations compiled by Reuters.

“If you believe that things are going to improve then they will improve along with it,” said Alan Moore, who helps manage $300 million at Milford Asset Management. “If you look at all the (economic) indicators coming through, you’re just starting to see that charts edging up again.”

“The market no longer looks particularly cheap – it’s very much a stock picker’s market at the moment,” he said.

He cited Fletcher, Sky City Entertainment Group, Freightways and Mainfreight as stocks one could “nibble away at.”

Sky City (NZX: SKC ) fell 1.2% to $3.23. The casino and hotel group is rated ‘outperform,’ based on the average of nine recommendations on Reuters, including four ‘buy” ratings. Freightways (NZX: FRE ) rose 0.3% to $3.25 and Mainfreight (NZX: MFR ) slipped 0.8% to $5.20.

PGG Wrightson Ltd (NZX: PGW ), the nation’s biggest rural services company, fell 2.7% to 71 cents after Silver Fern Farms advised that it may sell the 10 million Wrightson shares it got as part settlement of their failed merger. Moore said the potential overhang adds to concern the investment vehicle of former Wrightson chairman Craig Norgate may need to sell shares in the company to repay debt.

Stronger than expected retail sales in the U.S. didn’t rub off onto New Zealand’s retailers. Clothing chain Hallenstein Glasson Holdings (NZX: HLG ) fell 3.3% to $2.90 and Warehouse Group (NZX: WHS ) declined 2.8% to $4.13, the biggest decliners on the index today. The prospects of rising unemployment may sap consumers’ appetite for spending.

Fisher & Paykel Healthcare (NZX: FPH ), which gets almost 80% of its revenue in U.S. dollars, fell 2.5% to $3.15. The kiwi dollar traded at 70.61 U.S. cents, near the highest since August last year as the U.S. dollar weakened.

Signs of a recovery in the U.S. economy give investors more of a taste for risk and higher yields.

Team Talk Ltd NZX: TTK ), a broadband network services company, gained 2.4% to $2.15 after Communications Minister Steven Joyce said the government would seek partners for its rollout of high-speed broadband services in New Zealand.

Businesswire.co.nz

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