MARKET CLOSE: NZ shares gain as growth comes back into view

New Zealand shares rose for the third straight day as optimism the globe will avoid a double-dip recession. Shares including Freightways and Pumpkin Patch led the advance.

The NZX 50 Index gained 14.09, or 0.5%, to 3047.11. Within the index, 20 stocks rose, 19 fell and 11 were unchanged.

Freightways (NZX: FRE ) rose 2.6% to $2.82. The courier firm this week announced it had set up the infrastructure to allow traders on the TradeMe website to arrange shipments through the company’s network.

APN New & Media (NZX: APN ), the publisher of the New Zealand Herald, gained about 2% to $2.60 and children’s clothing retailer Pumpkin Patch (NZX: PPL ) rose 1.7% to $1.84.

Australia’s S&P/ASX 200 Index fell 0.6% and Japan’s Nikkei 225 Index slipped 1.6% today. Asia’s equity markets got a cold wind from the US, where chipmakers disappointed the market with their outlook statements. Weighing on sentiment, Japan’s industrial production unexpectedly slowed while the jobless rate rose.

Downgrades set a negative tone for shares in Asia, said Angus Gluskie, who overseas US$300 million at White Funds management in Sydney. Still, earnings from European and US companies “have surprised on the upside” and investors should be careful “not to confuse a lower rate of growth with no growth.”

“Equities are as cheap as anything on any historical measure – people are still pricing in a fear factor associated with a double-dip recession,” he said. The chances of that are diminishing and the market will start to price in the growth potential, Gluskie said.

PGG Wrightson (NZX: PGW ) fell 1.9% to 53 cents after halting negotiations on internalising NZ Farming Systems' management contract pending the outcome of Singapore-based Olam's 55 cents a share takeover offer which values the Uruguay company at $134.3 million.

Farming Systems traded at 56 cents today, one cent above the offer.

Telecom (NZX: TEL ) has finally rid itself of its struggling Australian retail business, confirming it sold the consumer division of its AAPT unit for A$60 million to iiNet. The shares gave up earlier gains to end the day at $1.99.

The phone company also sold its 18.2% stake in iiNet for A$70 million, about A$11 million below the carrying value as at June 30.

Pyne Gould (NZX: PGC ) fell 2.4% to 41 cents and Steel & Tube (NZX: STH ) declined 1.8% to $2.21.

Businesswire.co.nz

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