NZX 50 at six-week high as global fears ease

NZX 50 at six-week high as global fears ease

by Paul McBeth

Aug. 3 (BusinessDesk) – New Zealand shares hit a six-week high as optimism over the state of the global recovery stoked investors’ appetite for higher yields.

The NZX 50 rose 6.21, or 0.2%, to 3050.38, in its fifth straight gain. Within the index, 28 stocks rose, 12 stocks fell, and 10 stocks were unchanged. Turnover was $74.4 million.

Carpet maker Cavalier Corp. led the index higher, gaining 2.4% to $2.58 in trading today, while steel products manufacturer Steel & Tube Holdings gained 2.3% to $2.25.

Resins maker Nuplex Industries Ltd. gained 1.7% to $3.00.

The support for the manufacturers came as investors were more upbeat, and prices for raw materials climbed. The Thomson Reuters/Jeffries CRB Index, a broad measure of the price of commodities, gained 0.9% to 276.85.

“Companies took their direction from the global tone, and most are following on from that,” said Rickey Ward, equities manager at Tyndall Investment Management.

“Volumes are really light and have been for some time, which is typical of the activity ahead of reporting season.”

Bourse operator NZX Ltd. rose 1.4% to $1.50 after it reported a second soft month of trading as liquidity around the world dried up during the heightened fears of a double-dip recession.

The Reserve Bank of Australia held its target cash rate at 4.5% today, and Governor Glenn Stevens said Chinese growth is beginning to moderate, while economic recovery in the U.S. and Europe was slowing from the first half of the year.

Ryman Healthcare Ltd. gained 2% to $2.08 amid news it is considering listing on the Australian Stock Exchange. The company’s looking to buy land in Victoria in the next 12 months, when it can build its first Australian retirement village.

PGG Wrightson Ltd. rose 1.8% to 56 cents while NZ Farming Systems Uruguay Ltd. increased 1.8% to 57 cents as Singapore-based Olam International’s takeover bid for NZS gets closer.

Ward said Wrightson was well-placed in the Olam bid. It continues to earn management contract fees for the Uruguayan operation, and the Singapore company is likely to inject new life into NZS.

Agriculture Minister David Carter announced Fonterra Cooperative Group, the world’s biggest dairy exporter, will have to keep supplying milk to its rivals after reviewing the sunset clauses in the Dairy Industry Restructuring Act.

Under the legislation, Fonterra has to supply up to 600 million litres to its competitors a year.

Shares in Telecom Corp. increased 1% to $2.01 as investors continued to absorb the phone company’s official pitch to structurally separate in a bid to tap the government’s rural and urban broadband scheme. Rival provider, 2degrees, launched a 3G mobile service today, as Communications Minister Steven Joyce announced that 15 bidders had pitched for involvement in the government's ultra-fast broadband initiative.

Property investor AMP New Zealand Office Trust was unchanged at 71 cents after lifting its distributable earnings 2.5% to $60.7 million in the year through June.

Shares in financier Allied Farmers Ltd., which took on the Hanover loan books in a debt-for-equity swap last year, tumbled 22% to 4 cents after the company announced it’s looking to raise $19.3 million through a rights issue and placement at a deep discount.

It wasn’t the only minnow looking to tap shareholders, with payment software solutions company RIS Group hoping to raise $2.02 million from shareholders at an 83% discount to help fund its venture into India. The shares were unchanged at 6 cents.

Renaissance Corp., which distributes Apple products boosted net profit 150% to $473,000, or 1.07 cents per share, in the six months through June 30, and flagged a potential equity-raising to help fund increased growth.

The company expects demand for iPads and iPhones will keep supporting its turnaround. The shares dropped 3.1% to 31 cents.

New Zealand wage growth lagged behind rising prices in the year through June, according to the first round of labour data out today. The Labour Cost Index, which measures changes in pay rates for 6000 positions, rose an annual 1.6%, led by a 2.1% increase in public sector pay, falling behind the consumer price index, which advanced 1.8% over the same period. The data comes ahead of Thursday's household labour force survey, which is forecast to show unemployment crept up to 6.4% in the three months through June.

(BusinessDesk) 17:47:55

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