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MARKET CLOSE: NZ stocks rise as euro debt fears wane

Monday 22nd November 2010

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New Zealand stocks rose for the first time in a week after Ireland's government confirmed that it has asked the European Union and the IMF for a bailout. Telecom and Fletcher Building were among the gainers on the day, while Vital Healthcare Property Trust fell.

The NZX 50 Index rose 28.47 points, or 0.9%, to 3.293.63. Within the index, 28 stocks rose, 10 fell and 12 were unchanged. Turnover was $74.9 million.

Ireland's capitulation comes after the EU and the IMF agreed over the weekend to bailout Ireland's troubled banking sector in a bid to stop the sovereign debt contagion reaching Portugal and other heavily leveraged countries. While the scope of the package and the terms are yet to be announced, it is thought to be less than the 110 billion used to rescue Greece earlier this year.

"The Irish issue seems to be resolving itself to some degree, and the profit taking we experienced last week on the market weakness has turned around and people are taking positions again," said Grant Williamson, a director at Hamilton Hindin Greene. "There also appears to be some foreign buying in the market, with overseas investors looking at the strength of the currency and thinking that it is going to stay firmer, so they are investing here."

Telecom (NZX: TEL ) rose 2.4% to $2.18, while Fletcher Building (NZX: FBU ) rose 1.5% to $8.05.

New Zealand Refining (NZX: NZR ), which operates New Zealand's only oil refinery, rose 1.6% to $3.76, after it said "healthy" refining margins continued in September and October, with a processing fee of $34.9 million from a throughput of 5.3m barrels.

The gross refining margin of $US6.96 for the period was marginally down from $US7.16 in July and August, but above the margins in the first six months of the year.

Charlie's Group (NZX: CHA ) rose 7.4% to 16 cents, after it told shareholders at its annual meeting that first-half net profit is expected to rise by 43% on the back of a surge in sales.

Chairman Ted van Arkel says gross sales for the six months ending December will be about $21 million, "given the tremendous growth in Australian sales and with New Zealand keeping steady."

Vital Healthcare Property (NZX: VHP ) fell 7.4% to $1.13 ahead of its annual meeting on Wednesday, when it will ask unit holders to approve the acquisition of 12 properties in Australia and a new fee structure.

The trust is banking on a bigger take-up of life insurance by Australians in a A$164.5 million purchase of private hospitals and medical centres across the Tasman, and if successful will boost its portfolio value 70% to about $513.8 million.

Guinness Peat (NZX: GPG ) fell 2.8% to 70 cents, AMP NZ Office Trust (NZX: ANO ) fell 1.3% to 76 cents, and Air New Zealand (NZX: AIR ) fell 0.8% to $1.32.

Pyne Gould (NZX: PGC ) the financial services company looking to transform itself into a bank, fell 2.5% to 39 cents, after shareholders in Southern Cross Building Society giving the nod to the deal.

Almost 99% of SCBS shareholders signed off on the deal, which will fold SCBS and Canterbury Building Society into a new entity with Pyne Gould's Marac Finance, though a quorum for depositors wasn't met.

The merger is scheduled for early February, 2011 and will see the two building societies holding 14.5% each, according to previous statements, while Marac will hold nearly three quarters. Pyne Gould plans to distribute most of its stake in the entity if the merger is successful.

Pumpkin Patch (NZX: PPL ) fell 2.2% to $1.82 after the sudden departure of chairman Greg Muir, who announced his resignation after investors questioned his suitability due to his role in Hanover Finance, which collapsed in 2008.

On Friday, the Securities Commission said it would decide before Christmas whether to file criminal charges against the group's directors, who include the current line-up of Mark Hotchin and David Henry.

Shares in Pike River Coal and New Zealand Oil & Gas remained in a trading halt on the NZX and ASX today following an explosion at Pike's West Coast mine, which has left 29 miners unaccounted for. The companies have given no indication of when trading is likely to resume, but the halt in Australia will remain in place until at least tomorrow.

Pike (NZX: PRC ) fell 4.4% to 88 cents on Friday before the trading halt, as was last at 61 Australian cents on the ASX, while NZOG (NZX: NZO ) fell 4% to $1.20 on the NZX, and was last at 92 Australian cents on the ASX.

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