MARKET CLOSE: NZ shares rally; Tower extends gain, Fletcher rises

Tuesday 2nd June 2009

New Zealand shares rose in one of the busiest trading days this year, with Tower extending is gains after an upbeat earnings report and Fletcher Building advancing after better-than-expected building approvals in Australia.

The NZX 50 Index climbed 43.02, or 1.6%, to 2807.20. Within the index, 26 stocks rose, 22 fell and just two were unchanged. Turnover was $123 million.

Tower (NZX: TWR ) climbed 9.5% to an eight-month high of $1.84. On Friday, the insurer and investment manager part-owned by Guinness Peat Group posted a 32% gain in first-half profit on stronger earnings from general insurance.

With Tower “there was a pretty good performance across all divisions of the business,” said Craig Brown, who helps manage about $2 billion at ING New Zealand. “In a pretty difficult market it was a good result.”

Fletcher (NZX: FBU ) rose 4.3% to $6.78 after Australian government figures showed building approvals surged 5.1% in April, more than twice as much as expected, and from a revised 6.3% gain in March. Adding to optimism, the central bank kept its benchmark interest rate unchanged at 3%, suggesting it is more upbeat about the economic outlook. Australian rival Boral Ltd. jumped 4.3% to A$4.42 on the ASX, while CSR rose 5.6% to A$1.69.

With the second quarter now two thirds complete, investors are pondering whether companies have been able to revive earnings after a first-quarter dip.

Transport company Mainfreight (NZX: MFT ) fell 1.6% to $4.45. Last week it posted full-year profit before items of NZ$40 million, little changed from the year-earlier $40.8 million on the same basis, the company said in a statement today. It said trading in the fourth quarter was below expectations and similar conditions were noted in the current quarter.

“They would have a pretty broad exposure to the economy,” Brown said. “That to me suggests that things have not got a whole lot better.”

Nuplex Industries (NZX: NPX ) fell 6.5% to 43 cents after announcing plans for a one-for-four share consolidation. The proposal, which will trim the company’s bloated share register post it capital raising, doesn’t affect the valuation of investors’ holdings.

Tourism Holdings (NZX: THL ), which depends on overseas visitors to generate revenue from its campervan hire business, fell 5.9% to 43 cents as the New Zealand dollar held near 65 U.S. cents, from less than 50 cents in March, making the nation a more expensive tourist destination.

Fishing company Sanford (NZX: SAN ), which exports most of its catch, fell 0.9% to $5.75.

Strategists and currency traders are predicting the kiwi dollar will move even higher this week as investors’ risk appetite grows and concerns linger about the looming budget deficits in the U.S.

The New Zealand dollar bought 64.77 U.S. cents today, from 65.03 cents yesterday.

“People are seeing the kiwi economy as likely to do better than most, particularly in a world where people are getting more upbeat,” said Darren Gibbs, chief economist at Deutsche Bank. He predicts the New Zealand dollar may trade between 64 U.S. cents and 65.70 cents this week after reaching a seven-month high of 65.65 cents.

Pike River Coal (NZX: PRC ) fell 3.3% to $1.19 after answering its second share price inquiry in as many months. The coal miner said it knew of no reasons why its stock should have climbed, other than factors already known to the market.

Fisher & Paykel Appliances continued its post-refinancing rally, gaining 4.6% to $1.15 after announcing it has issued about 58 million new ordinary shares to China’s Haier. The New Zealand appliance company gained distribution into China and the endorsement of a major manufacturer by attracting Haier to its refinancing plan, while repaying debt and strengthening its balance sheet.

Telecom (NZX: TEL ) rose 4.4% to $2.62 after Australia’s competition regulator cleared a proposed mobile phone merger between Hutchison Telecommunications and Vodafone. Telecom owns 10% of Hutchison.

PGG Wrightson (NZX: PGW ) fell 3.7% to $1.30 and NZ Farming Systems Uruguay declined 3.6% to 53 cents. Fonterra Cooperative Group is scheduled to run its latest milk powder auction this week after prices fell at its sale in May.

Businesswire.co.nz

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