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MARKET CLOSE NZ shares gain as Xero soars to $20.58, Pumpkin Patch falls

Tuesday 15th October 2013

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New Zealand shares rose, as Xero soared to a record and Diligent Board Member Services rebounded from a two-day slump after a broker reiterated a 'buy' recommendation. Pumpkin Patch, which is to drop out of the benchmark index, led decliners.

The NZX 50 Index rose 13.758 points, or 0.3 percent, to 4747.925. Within the index, 20 stocks rose, 18 fell and 12 were unchanged. Turnover was about $105 million.

Xero climbed 4.5 percent to $20.58, elevating the as-yet unprofitable company to eighth biggest on the exchange following a $180 million capital raising this week that included existing US investors and local fund manager Milford Asset Management. The shares were placed at $18.15, which was a premium to their last traded price at the time.

"Obviously people want to give them the money," said Greg Easton, an adviser at Craigs Investment Partners. "Nothing is going to hold them back." Selling the shares at a premium was "a massive vote of confidence."

Easton said there is still demand for New Zealand shares though there has been "a bit of profit taking to fund new ventures." He is unable to comment on the government's selldown of Meridian Energy because Craigs is helping manage the sale.

Diligent rose 0.7 percent to $4.15, snapping a two-day slide that erased about 15 percent of its market value after it posted a weaker pace of sales growth. Craigs analyst Stephen Ridgewell yesterday reiterated the shares as a buy, saying there is "an attractive long-term market opportunity" for its software that helps company directors manage their workflows.

Pumpkin Patch, the children's clothing chain, fell 2.9 percent to $1. The lowest ranked stock on the index, will be removed from the NZX 50 on Oct. 21, meaning investment funds which track the index will need to reweight their holdings to match the changes.

Fletcher Building slipped 0.2 percent to $9.40 and Telecom gained 0.2 percent to $2.30.

Shares in Infratil gained 0.6 percent to $2.55 after the infrastructure investor said it will sell its Manston Airport in Kent for 350,000 pounds, completing the exit from its unsuccessful investment foray into the British airports.

Methven gained 5 percent to $1.48 after the tapmaker reported a 21 percent jump in first-half profit to $2.8 million as its New Zealand and UK units improved earnings.

Contact Energy rose 1.3 percent to $5.32 after the biggest listed power company held its annual meeting in Christchurch, affirming plans to raise its final dividend by 2 cents per share without keeping the door open for an even bigger return or a release of capital.

Abano Healthcare was unchanged at $6.65 after its second-biggest shareholder, Fisher Funds Management, said the potential takeover bid by Archer Capital and the company's biggest investor Peter Hutson undervalued the specialist medical investor.

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