MARKET CLOSE: NZX 50 snaps 3-day slide; MHI gains

MARKET CLOSE: NZ stocks snap three-day slide; Michael Hill, retailers gain

By Jason Krupp

August 13 (BusinessDesk) – New Zealand stocks snapped a three-day decline as better-than-expected June retail sales numbers helped the bourse shrug off negative sentiment from offshore markets. Michael Hill International Ltd., Kathmandu Holdings and Briscoe Group led retailers on the day.

The NZX 50 rose 8.2 points, or 0.3%, to 3015.14. Within the index 27 stocks rose, 15 fell and 13 were unchanged. Turnover was $68.7 million.

“The retail sales numbers looked pretty promising today, and it certainly has alleviated some of the concerns in the market,” said Rickey Ward, domestic equities manager for Tyndall Investment Management. “It definitely came as a surprise, and has gone against some of the other numbers we’ve been seeing in that space. I guess the question for investors is going to be how sustainable is it?”

The NZSX Consumer Index rose 0.8% to 1573.7 after data from Statistics New Zealand showed consumer spending on recreational items had soared in June, lifting retail sales in the survey’s biggest monthly gain since February 2007.

Michael Hill International, the jewellery chain, rose 3% to 69 cents, Kathmandu Holdings, the outdoor retailer, rose 1.9% to $1.64, and homeware retailer Briscoe Group rose 1.8% to $1.13. Pumpkin Patch Ltd, the children’s clothing chain, rose 1.2% to $1.75.

Shares in NZ Farming Systems Uruguay Ltd., the South American dairy operator, rose 3.6% to 58 cents, leading gainers on the day. The company had earlier announced that it has been granted tax benefits with an estimated current value of $US20 million to $US25 million (NZ$28 -NZ$35 million) under Uruguayan tax law.

Farming Systems is currently facing a takeover bid 18.45% Singaporean shareholder Olam International, which has offered to acquire shares in the company it didn’t already own at 55 cents apiece.

Pyne Gould Corp., the financial services company, rose 2.5% to 41 cents, Telecom Corp., New Zealand’s largest telephone company, rose 2.5% to $2.06, and Contact Energy Ltd., the Auckland based utility company, rose 1.7% to $5.80.

PGG Wrightson Ltd., the rural services company, fell 7.1% to 52 cents, leading declines. The company earlier announced it full year earnings, with profit for the year at $23.3 million, or 4 cents, up from a loss of $66.4 million previously.

“The results met expectations but it was the outlook that was really more concerning,” Ward said. “Still, this is a company in transition, so I’m not surprised the outlook is so muted given that they don’t want to over promise and under deliver.”

The company has been transformed over the past two years in terms of officers, business units and capital after installing Tim Miles as chief executive, banking sector heavyweight John Anderson as chairman and raising about $250 million to slash debt in an offer that installed China’s Agria Corp. as biggest shareholder.

Air New Zealand Ltd, the national carrier, rose 0.8% to $1.14. The airline’s international airline group general manager, Ed Sims, announced today he is leaving the company.

Fletcher Building Ltd., the largest company on the exchange, fell 1.6% to $7.35, after data showed that New Zealand residential property sales plummeted to their lowest level for a July month in a decade, as rising interest rates, slower population growth and tax changes took their toll on the market.

The REINZ Monthly Housing Price Index showed nationwide prices also fell in July, down 1.2% to 3191.5 from June. In the three months to July, the index shows housing prices decreased by 1.1 percent.

APN News & Media Ltd., another dual-listed company, fell 3.1% to $2.52, Goodman Fielder Ltd., the food ingredient maker, fell 1.3% to $1.57 and Freightways Ltd., the integrated logistics company, fell 1.1% to $2.68.

Telstra Corp., the dual-listed telecommunication company, fell 2.1% to 3.65. Earlier its Australian parent company had announced that it was selling its 51% stake in SouFun, China's second-largest online real estate website, for about US$413.1 million (NZ$579.4 million).

The Australian telco said private equity firms General Atlantic and Apax Partners and the two existing shareholders of SouFun (founder Vincent Mo and venture capital firm IDG), have agreed to buy any of Telstra's shares in SouFun which aren't sold through a public float up to an agreed maximum price.

(BusinessDesk)

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