MARKET CLOSE: NZ stocks snap 3-day slide

Tuesday 20th July 2010

New Zealand stocks snapped a three-day slide, led by NZ Oil & Gas, amid speculation keenly awaited results of stress tests for European banks this week will alleviate global fears of contagion from the region’s debt crisis.

The NZX 50 rose 27.6 points, or 0.9%, to 2992.2. Within the index 24 stocks rose, 12 fell, and 14 remained unchanged. Turnover was $ 68.3 million.

In all, 91 European banks will be tested for among other things, sovereign default risk, with the results to be published after the close of European trading on Friday, the Committee of European Banking Supervisors said this week. The detailed results will help investors and traders gauge the likely success of the European Union’s 750 billion euro bailout fund.

“If you go back to March last year when the US did similar thing, it was a circuit breaker for the banking sector,” AXA Global Investors head of investment strategy Keith Poore says. “I don’t think the European results will be as strong as that but it will show that the banks are in pretty good shape, and I think the market is going to like it.”

Pacing gainers on the day, energy exploration company NZ Oil & Gas (NZX: NZO ), rose 3.3% to $1.25, regaining some of the ground it lost yesterday on news that the second of two exploration wells on the highly prospective Tui oil and gas zone had failed to find any evidence of hydrocarbons. The company owns a 12.5% stake in the field.

Rakon (NZX: RAK ) rose 3.3% to 95 cents, and Tower (NZX: TWR ) rose 2.8% to $1.85.

Telecom (NZX: TEL ) rose 2.7% to $1.93. Alcatel-Lucent New Zealand, Telecom’s technology partner on their XT Network, said in its report to the Companies Office that the two had agreed to settle their dispute over network outages.

Allied Farmers (NZX: ALF ) rose 4.6% to 46 cents on news that the company had gained a six-month extension of its loan facility with Westpac, giving the finance company more time to repay debt and restructure its business.

Allied has $16.5 million outstanding and had an overdraft facility of $2.5 million that was set to expire on July 1. The extension, its second, is until March 31.

New Zealand Farming Systems (NZX: NZS ) rose 2% to 54 cents, adding to yesterday’s 29% surge after Singapore’s Olam International said it wanted to acquire shares in the company it didn’t already own at 55 cents apiece.

Pacing decliners on the day, NZX (NZX: NZX ) fell 2.7% to $1.46, PGG Wrightson (NZX: PGW ) fell 2% to 49 cents and ING Medical Properties Trust (NZXING) fell 1.6% to $1.20.

Guinness Peat Group (NZX: GPG ) fell 1.5% to 65 cents, Vector (NZX: VCT ) fell 1.4% to $2.11, and New Zealand Refining (NZX: NZR ), which operates an oil refinery in Whangarei, fell 0.9%to $3.26.

China’s Bright Dairy & Food, which has agreed to buy a majority shareholding in Synlait’s milk processing vehicle Synlait Milk for $82 million, said it will support plans to float the company on the NZX within the next five years.

If Synlait Milk does list, Bright Dairy will be entitled to subscribe to new shares to keep its 51% holding, which the Chinese company said is a long-term investment. Synlait, which abandoned a $150 million share sale to list on the NZX last year due to a soft response from investors, is seeking funds to build a second drier at its main site to help boost its milk powder capacity.

Nelson-based conglomerate Talley’s Group this evening launched a full takeover bid for the remaining 23.7% of AFFCO Holdings Ltd that it doesn’t already own, offering shareholders the current trading price of 37 cents a share.

The price is the same as that offered for 23.46% of AFFCO belonging to the Spencer family vehicle, Toocooya Nominees Ltd on June 11, to add to the 52.8% already owned by Talley’s Group.

Businesswire.co.nz

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