MARKET CLOSE: Shares rise; Wrightson gains, Nuplex hangs on

Friday 3rd April 2009

Shares rose as an upbeat Group of 20 summit helped lift sentiment. PGG Wrightson led a rally on the NZX 50 that included beaten-down stocks like Tourism Holdings. Nuplex rose 3% to 34 cents.

The NZX 50 rose 28.67, or 1.1%, to 2616.17 as at the 5 p.m. close of trading in Wellington, its biggest gain in five trading days. Within the index, 38 stocks rose, five fell and seven were unchanged. Turnover was $77.9 million.

Wrightson rose 12% to $1.13, picking up after a 1-week, 16% drop. Figures yesterday showed world prices for meat, dairy and wool are rising, though the kiwi dollar's rebound has erased the benefits to farmers. Tourism Holdings climbed 8.9% to 49 cents.

Stocks rose in Europe and the U.S. after the G-20 announcements, which included pledges of US$1.1 trillion from the world's biggest nations to bolster the IMF and free up trade credit.

"Comments out of the G-20 were good for the general confidence of the market," said Angus Gluskie, investment manager at White Funds Management in Sydney. Still, "people are just reacting to the positive sentiment rather than the detail. I don't believe there's sufficient substance there that really changes the outlook."

ING Property Trust rose 1.8% to 56 cents after announcing an 8.3% reduction in the value of its portfolio and saying New Zealand property investors are faring better than their counterparts in other markets.

The NZSE Property Group Index has declined 18% in the past 12 months, while the S&P/ASX 300 Property Index has dropped 61%. In the U.S., the S&P Financials Sector index, which includes companies such as Simon Property Group, has fallen 64%.

Gluskie said there is value in the market for beaten down stocks of strong companies for investors prepared to ride through the cycle. Some listed property trusts were prime targets for takeover activity or privatization, he said. He singled out GPT Group, which rose 4% to 50 Australian cents on the ASX today.

Nuplex, the specialty chemical maker, is ex the entitlement to seven shares at 23 apiece, part of a refinancing plan that forced the company to offer a deep discount on its equity and hand over rights to subscribe for more of the stock to reduce its gearing.

The capital raising, handled by First NZ Capital, was criticised for granting too-favourable terms to underwriters and arrangers. The shares have shed 73% in the past month.

"There's been a lot of finger pointing at First NZ Capital, but they saved it from the brink of death," said Rickey Ward, equities manager at Tyndall Investment Management.

With Nuplex, the "re-rating on the back of the balance sheet has eased concern," he said.

Fletcher Building climbed 0.9% to $5.90. Figures from Auckland real estate firm Barfoot & Thompson showed sales rose to a 20-month high last month, as prices fell. The construction and building materials company this week completed the first part of its capital raising, with raised $406.5 million from institutions. It is aiming for $505 million, including a retail component.

"Fletcher Building has no such issues" as Nuplex, Ward said.

F&P Healthcare fell 2.9% to $3.06 and F&P Appliances declined 4.1% to 47 cents, leading the NZX 50 lower.

Resources stocks climbed in Sydney, with Minara Resources climbing 18% to 53 cents on the ASX. In New Zealand, Pike River Coal gained 6.5% to 82 cents. Rakon climbed 4.2% to $1.25. Tapmaker Methven rose 3.3% to $1.24 and trucking firm Mainfreight rose 3% to $4.12

"Everyone's been backing equities for the last few days," Tyndall's Ward said. "The volume is very light" and it looks like investors are taking stock while optimistic sentiment sweeps the world, he said

Businesswire.co.nz

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