MARKET CLOSE: NZ stocks rise; Fletcher gains on ASX talk

MARKET CLOSE: NZ stocks rise; Fletcher paces gainers on ASX 200 speculation

By Jason Krupp

Feb. 2 (BusinessDesk) - New Zealand shares rose for the second time in three sessions, with Fletcher Building Ltd. pacing gainers on speculation the stock will soon be included in the Standard & Poor's ASX 200 Index, spurring demand from index-weighted funds and Australian investors.

The NZX 50 Index rose 9.93 points, or 0.3%, to 3358.40. Within the index, 25 stocks rose, 15 fell, and 10 were unchanged. Turnover was a higher- than-usual $121.8 million.

Fletcher, New Zealand's biggest construction company, rose 1.8% to $7.92 with 6.9 million shares changing hands after the Australian stock exchange announced it would reweight its indexes in March due to a change in methodology.

The new calculation, which factors in liquidity, size and tradability, sparked speculation that Fletcher would be included in the Australia's benchmark index, which would trigger a significant reweighting by fund managers.

The inclusion ""will allow them to obtain a diversified register which has been an issue for the company for some time," said Rickey Ward, domestic equities manager at Tyndall Investment Management. "A large proportion of the company's earnings come from Australia but not a lot of Australians own shares in it because it is not on the benchmark."

Telecom, New Zealand's biggest phone company, will also be reweighted under the new methodology, with its weighting on the ASX 200 likely to fall by 25% to 30%, it said in a statement to the ASX. Shares fell 1.3% to $2.22.

Pumpkin Patch Ltd., the children's clothing retailer, rose 2% to $1.50. The stock continued to regain some of the ground it lost after the company last week said full-year earnings may fall by as much as 37% due to weaker sales.

Tower Ltd., the general insurer, was unchanged at $1.95, after the company said at its annual meeting that it was considering returning capital to shareholders as a way of addressing its lazy balance sheet and legislative changes.

Last year, Tower tried to use its surplus capital to take over Fidelity Life but withdrew its bid, complaining about the lack of information Fidelity was prepared to provide.

Guinness Peat Group, the investment holding company which owns a 34% stake in Tower, was also unchanged at 68 cents.

Pyne Gould Corp., the financial services company, fell 5.7% to 33 cents, leading decliners on the NZX 50.

Building Society Holdings Ltd., the would-be bank made up PGC's Marac finance unit and the Canterbury and Southern Cross building societies which listed on the New Zealand stock exchange yesterday, 2.3% to 86 cents.

PGG Wrightson Ltd., the rural services company, fell 1.9% to 53 cents. The company is facing a takeover offer from Singapore's Agria Corp., which is looking to boost its holdings in Wrightson to just over half, with an offer of 60 cents a share with the help of China's Hope Group.

(BusinessDesk)

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