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MARKET CLOSE: NZ stocks rise; NZX gains on share buy-back, dividend plan

Monday 5th July 2010

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New Zealand stocks rose for a second day, after 11 straight declines, after China said it is committed to maintaining a steady growth rate. NZX, Pyne Gould and Steel & Tube  lead gainers.

The NZX 50 Index rose 9.2 points, or 0.3%, to 2,947.3. Within the index 21 stocks rose, 19 fell and 10 were unchanged. Turnover was a lower-than-average $40.5 million, with trading subdued ahead of the Independence Day holiday in the US.

“Growth rates throughout Asia look that much higher than in Europe or the Americas, and it certainly does look to be a place that investors are looking at,” said Grant Williamson, director at Hamilton Hindin Greene. “Even with some speculation about China’s ability to maintain growth, they’re still looking at pretty impressive growth that we’d love to have.”

Williamson said investor focus this week be on the Australian market, with the US effectively closed until Wednesday.

“The Australian market has been weighing on the New Zealand market for the past eight weeks now because of the super tax and the political changeover, and it certainly appears due for a bounce,” Williamson said.

Shares in NZX (NZX: NZX ) rose 6.9% to $1.56 as investors reacted to news of the bourse’s buy-back plan and their amended dividend policy. Williamson said NZX was “jumping at the first sign of good news.”

Pyne Gould (NZX: PGC ) rose 5.3% to 40 cents on news that the company’s cornerstone investor George Kerr has tapped sophisticated investors for a $150 million war chest to come out when banks are unwilling to open their credit lines. Torchlight Investment Group, the vehicle that provided a $100 million facility to embattled financier South Canterbury Finance, will manage the fund, called the Torchlight Fund No.1 LP, which could rise by a further $20 million following reserved allocations.

Pike River Coal (NZX: PRC ), the coal miner, rose 3.5% to 89 cents as investor appetite for coal stocks on the announcement that Banpu, Thailand’s biggest coal producer, had bought out the remaining stake in Centennial Coal Co. for A$2 billion. Williamson said the deal put a 40% premium on Centennial, which was creating interest in Pike.

Shares in Steel & Tube Holdings(NZX: STH ) rose 5.1% to $2.26.

Pacing decliners, PGG Wrightson (NZX:PW) fell 2.1% to 47 cents, and clothing retailer Pumpkin Patch (NZX: PPL ) fell 1.6% to $1.84.

Restaurant Brand (NZX: RBD ) fell 1.7% to $2.31, which Williamson said was due to profit taking by investors following the company’s announcement of better-than-expected profits last week.

New Zealand Oil & Gas (NZX: NZO ) fell 0.8% to $1.23 on news that production from the Tui oilfield is forecast to tumble by 2 million barrels to 2.8 mmb's in the year ended June 30, 2011. Output would be cut by 300,000 barrels because of an extended shut-in at the Pateke-3H well, it said.

Auckland house sales slumped last month as winter malaise set in among buyers amid declining demand in the property market. The number of sales sank 16% to 665 in June from a month earlier, and was down 23% from a year ago, according to Barfoot & Thompson, Auckland's biggest real estate firm. The average sale price dropped 3.6% to $523,058 month-on-month, and was up an annual 0.2%.

UMR Research's Consumer Comfort Index showed kiwis are feeling more 'comfortable' about the economy and their own finances. The survey, taken last month, showed 48 percent of New Zealand's regard the economy as being good or excellent, up from 37 percent in April.

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