MARKET CLOSE: NZ stocks gain; Rakon jumps, Pike rises

Friday 13th March 2009

New Zealand shares rose, led by Rakon, after Wall Street's rally spilled into Asia on optimism US banks will recover and the world's biggest economy will climb out of a prolonged slump.

The NZX 50 Index rose 31.77, or 1.3%, to 2523.394, only the second gain in six session. Within the index, 32 stocks rose, seven fell and 11 were unchanged. Turnover was NZ$78.6 million.

Rakon, which sells navigation system components and counts U.S. and European companies among its clients, surged 19% to NZ$1.15, trimming its slide this year to 26%.

Pike River Coal, which is tapping investors for more funds to tide it over until coal sales begin, climbed 6.7% to 80 cents. The coal miner has dismissed a prediction by UBS that coal prices could plummet to as low as US$85 per metric ton this year, BusinessDay reported. Mines general manager Peter Whittall said the industry was forecasting prices between US$120 and US$150.

New Zealand shares lagged behind the rally elsewhere in Asia today. The Nikkei 225 Index advanced more than 4%, led by banks and exporters after Bank of America followed Citigroup in reporting a return to profit and US retail sales fell less than feared. Mitsubishi UFJ Financial climbed 5.6% and Canon surged 7%. Australia's S&P/ASX 200 Index rose 3.3% as Goodman Group, whose shares have sunk 67% in the past month, soared 31% to 27.5 cents, leading a rally in property investors. The Dow Jones Industrial Average climbed 3.5%, led by Bank of America.

"Markets are looking quite cheap but also hugely volatile," said Paul Richardson, equities manager at BT Funds Management. "If you've got a long enough timeframe you should be edging back into equities."

Guinness Peat Group gained about 9% to 73 cents and tap-maker Methven rose 7% to 1.07. Warehouse Group rose 1.5% to $3.50 after government figures showed retail sales excluding autos and fuel gained 0.3% in January from December. Warehouse yesterday posted a 24% drop in first-half profit on costs to exit fresh food, though its gross margin widened.

Richardson said the retailer may be benefiting as consumers "trade down" to the discount stores in search of cheaper goods in the face of a prolonged recession and rising jobless rate.

Restaurant Brands, which operates the nation's KFC, Pizza Hut and Starbucks outlets, rose 2.9% to 72 cents and may also be a beneficiary of consumer choices in tough times.

Reserve Bank Governor Alan Bollard yesterday forecast unemployment will rise to 5.2% this year and peak at 6.8% early in 2010.

Ryman Healthcare rose 4.9% to $1.28 and Mainfreight rose 4.6% to $3.68. Stocks exchange operator NZX climbed 6.8% to $6.

Nuplex Industries, the specialty chemicals maker, rose 3.9% to $1.07. The company this week appointed advisers and accountants to assess its capital needs after breaching terms of its loans. PGW Wrightson, the rural services company that renewed it bank facilities this month, gained 4.3% to 98 cents.

"The market is looking for some comfort that balance sheets can hold together," Richardson said.

(Businesswire)

By Jonathan Underhill

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