MARKET CLOSE: Stocks rise; Rakon soars, GPG advances

Thursday 5th March 2009

Stocks rose for a second day, with Rakon leading a rally among stocks most punished in the recent rout as some investors bet much of the bad news is already priced in.

The NZX 50 Index climbed 22.058, or 0.9%, to 2491.401. Within the index, 28 stocks rose, 14 fell and eight were unchanged. Turnover was a lacklustre NZ$43 million.

Rakon climbed for a second day after sinking to a record low. The maker of components of navigation systems has slumped 46% this year. Investor Guinness Peat Group climbed 11% to 63 cents having sunk 43% this year. Cavalier Corporation advanced 9.6% to NZ$1.26 having drop 34% since the start of the year.

The NZX 50 Index has rebounded from a five-year low in the past two days amid expectations interest rates are set to fall further, boosting the appeal of stocks near record lows.

"Equity markets are more attractive" with downward pressure on cash rates and stocks trading at relatively low prices, said Jason Wong, head of investment strategy at AMP Capital.

Tourism Holdings climbed 8% to 54 cents, having sunk 25% this year on concern dwindling tourist inflows will sap demand fro its campervans, leaving the company with less revenue and high fixed costs.

Fisher & Paykel Appliances gained 4% to 52 cents having shed 63% this year.

Economists predict Reserve Bank Governor Alan Bollard will cut the official cash rate by 50 basis points to 3% when he reviews monetary policy on March 12, a record low and 25 basis points below Australia's benchmark.

APN News & Media, publisher of the New Zealand Herald, fell 23%to NZ$1.30, leading the NZX 50 Index lower.

New Zealand's economy may have entered its fifth quarter of recession, according to Treasury estimates, while Australian gross domestic product shrank 0.5% in the fourth quarter, the first contraction in eight years.

Figures today stoked concern Australia's economy may contract for a second straight quarter, tipping into recession. Building approvals fell 3.7% in January, the seventh straight monthly decline while government figures showed exports fell 5% and imports declined 7%.

The S&P/ASX 200 Index rose 0.7% to 3188.5. BHP Billiton gained 4.4% to A$28.31 and Rio Tinto rose 5.2% to A$45.75 amid speculation China will take further steps to underpin economic growth. Premier Wen Jiabao said China would increase its budget deficits to ensure the nation continued to meet its economic growth target of 8% a year.

Businesswire.co.nz

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