MARKET CLOSE: NZ stocks rise; Air New Zealand gains, Kathmandu falls

Monday 29th November 2010

New Zealand stocks rose for the first time in three sessions, as investors took their lead from Australia, which shrugged off some of the nervous sentiment stalking global markets. Air New Zealand paced gainers on the day, while Kathmandu Holdings fell.

The NZX 50 Index gained 6.13 points, or 0.2%, to 3,270.38. Within the index, 17 stocks rose, 16 declined and 17 were unchanged. Turnover was $74.1 million.

In afternoon trade, Australia's S&P/ASX 200 rose 0.4% to 4,615.4, bucking the trend on global markets where investors are collapsing their riskier positions amid lingering concerns around Europe's sovereign debt situation and heightening tensions on the Korean peninsula.

"Where a lot of the selloff is focused is on the commodity players, or beta stocks, which is not that big over here, so we're tending to see a muted exposure," said Peter Sigley, an institutional broker for Goldman Sachs & Partners. "The key leading indicator for New Zealand is the Australian market, which is up on the day, so there is some positive follow-through for the kiwi market."

Sentiment was also helped by positive business confidence numbers, which rose for a second straight month amid optimism that profits will rise and access to credit will improve, although Sigley said investors would be looking for the follow through into the economy.

Air New Zealand (NZX: AIR ) rose 3% to $1.38, Westpac (NZX: WBC ) rose 1.8% to $27.49, and Property for Industry (NZX: PFI ) rose 1.8% to $1.16.

Telecom (NZX: TEL ) rose 2.3% to $2.21 on speculation that New Zealand's biggest telephone company will get a stake in the government's ultrafast broadband initiative, which is expected to be announced this week, Sigley said.

Shares in Allied Farmers (NZX: ALF ) rose 9.5% to 2.3 cents, after the Serious Fraud Office announced that it had launched an active investigation into Hanover Finance, the finance company which sold its loan book to Allied in a debt-for equity swap last year.

The investigation comes after the war of words between the two companies reached fever pitch last week, when Hanover set its lawyers on Allied after it refused to pay the last $5 million related to the deal, having accused Hanover of breaching the agreement.

Fisher & Paykel Appliances (NZX: FPH ) was unchanged after the whiteware maker trimmed its guidance for full-year earnings and now expects earnings before interest and tax of $63 million to $70 million, from the $78 million it forecast at its annual meeting. EBIT from appliances is expected to be $28 million to $35 million, and for finance around $35 million, it said.

Kathmandu (NZX: KMD ) fell 3% to $1.62, pacing decliners on the exchange. Pyne Gould (NZX: PGC ) fell 2.6% to 38 cents, and Rakon (NZX: RAK ) fell 1.7% to $1.13.

Argosy Property Trust (NZX: ARG ) fell 2.6% to 76 cents after it posted a $93 million first-half net loss, although that reflected a $103.2 million non-cash charge for government tax changes.

Net distributable income fell 16.3% to $17.5 million as net property income fell 13% to $35.6 million for the six months ended September 30, reflecting asset sales during the last year, while earnings before interest and tax fell 8.7% to $31.4 million. Before the tax charge, the trust made a $10.2 million profit compared with a $5.6 million loss in the same six months a year earlier, which reflected property devaluations.

Methven (NZX: MVN ) fell 3.1% to $1.58 after the tapware and bathroom supplies manufacturer cut its cut its full-year guidance, saying earnings growth will stall because the economic recovery is grinding slower than expected, with profit likely to match last year’s $7.8 million.

Telstra (NZX: TLS ) fell 1.9% to $3.62 after the Inland Revenue Department accused the company's New Zealand division of intentionally delaying the progress of 10 tax avoidance cases in the High Court.

Tower (NZX: TWR ) fell 1% to $1.97, after it said it was looking to spend its $207.8 million cash hoard on possible acquisitions after its hostile bid for Fidelity Life Assurance Co was rebuffed by the target firm.

Last month Tower made a $118 million cash and scrip offer for Fidelity out of the blue at a 2.5% premium to the price the target firm last changed hands at. Shares in Guinness Peat Group were unchanged at 70 cents.

AMP (NZX: AMP ) fell 0.9% to $6.46 after it signed binding transaction documents with intended takeover target Axa Asia Pacific following the completion of initial due diligence.

BusinessDesk.co.nz

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