MARKET CLOSE: NZ stocks rise; Telecom paces gainers

MARKET CLOSE: NZ stocks rise; Telecom paces gainers, Freightways falls

By Jason Krupp

June 23 (BusinessDesk) - New Zealand stocks rose, snapping five days of losses, with Telecom Corp. pacing gainers amid increased buying interest ahead of its structural separation. Freightways Ltd. fell.

The NZX 50 Index rose 4.34 points, or 0.1%, to 3,461.8. Within the index, 15 stocks rose, 20 fell, and 15 were unchanged. Turnover was $135.2 million.

Telecom, the country's biggest phone company, rose 2.9% to $2.48, its highest level in almost a month amid increased interest from investors ahead of its structural separation into two businesses, a key requirement to participate in the government's $1.35 billion ultrafast broadband network.

Parliament today passed legislation enabling the split, and investors are expected to vote on the proposal later this year.

Methven Ltd., the tapware maker, rose 4.1% to $1.51 was the biggest gainer on the day.

Tower Ltd., the general insurer, rose 2.6% to $1.59. The company today said it expects rising costs of reinsurance will lift its expenses by as much as $31 million this year.

Of that $7 million to $11 million will be spent on reinsurance excess and additional cover after the latest 6.3 magnitude quake earlier this month, it said in a statement. That’s on top of the $15 million to $20 million impact it flagged on the February quake.

"The stock seems to be bouncing back after being heavily oversold since the earthquakes," said James Smalley, client advisor at Hamilton Hindin Greene. "The stock has effectively lost about 40 cents since the February earthquake, but the bottom line cost figure from that is only about 10 cents a share so you could argue the market is overreacting."

Guinness Peat Group, the investment holding company, rose 1.3% to 79 cents. The company earlier this week announced it would halt trading in its shares next week to make its capital return to shareholders of some $158 million.

The week-long suspension will let GPG complete its share cancellation, which was approved by shareholders at the June 8 annual meeting.

Cavotec MSL Holdings, the global engineering group and owner of Christchurch-based MoorMaster, rose 1.8% to $2.85 after it said it won a multi-million euro order to supply 24 of its MoorMaster units designed for handling containers ships to a Mediterranean sea port.

Argosy Property Trust, the listed property investor, was unchanged at 81 cents after OnePath NZ Ltd. backed off its proposals to internalise the management of its two listed property trusts. The fund manager wanted $32.5 million from Argosy Property Trust and $14 million from Vital Healthcare Property Trust.

Australia & New Zealand Banking Group, the parent of OnePath, fell 3.2% to $27.60 on the NZX.

Freightways, the express package company, fell 3.3% to $3.24, leading decliners on the exchange.

Smalley said the decline was likely due to a single shareholder disposing of a large tranche of stock, with volumes on the day notable higher than usual.

The stock is rated as 'outperform' according to the consensus view of six analysts compiled by Reuters, with a median target price of $3.43.

Restaurant Brands NZ Ltd., the fast food franchise operator, fell 0.8% to $2.55 after it said it expects to sustain current levels of profitability and increase dividends in spite of the slowing the rate of refurbishment of its KFC stores which have been the major driver of the company's turn-around.

The company is also considering adding a fourth brand, Taco Bell, to its three existing brands which include Pizza Hut and Starbucks.

Heartland New Zealand Ltd., the would-be bank looking to acquire PGG Wrightson Ltd.'s finance unit for $100 million, fell 2.8% to 70 cents. Wrightson, the rural services firm, fell 2% to 48 cents.

Telstra Corp., the Australian phone company, fell 2.3% to $3.86 on the NZX. The company today signed an A$11 billion agreement to allow the country's new high-speed broadband network to use its existing network and infrastructure.

Contact Energy Ltd., the country's biggest listed electricity company, fell 1.1% to $5.45, with the stock continuing slide after it warned earnings are likely to miss analysts' forecasts due to low wholesale electricity prices and a slump in demand because of the unseasonably warm winter.

(BusinessDesk)

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