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MARKET CLOSE: NZOG leads shares higher

Wednesday 14th July 2010

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New Zealand stocks rose for their eighth session out of nine, buoyed by global optimism as Intel Corp. reported better-than-expected earnings estimates, stoking hopes for a positive corporate reporting season in the US.

New Zealand Oil & Gas (NZX: NZO ) led gainers on the day after the company announced that larger than expected recoverable gas reserves in its Kupe Field.

The NZX 50 rose 18.5 points, or 0.6%, to 3,027.4. Within the index 32 stocks rose, 10 fell and eight remained unchanged. Turnover was $50.5 million.

“There is a strong correlation between our market and what is going on in globally, and we’re just really following their lead, especially the US,” AMP Capital equities manager Guy Elliffe said. “US markets moved overnight on better-than-expected earnings growth, but before that there was a little bounce on the NZX after being a depressed for some time. The market has gone through a severe correction and I think it just found a price level where some natural buying could occur following oversold levels.”

Shares in NZOG surged 7.9% to $1.37 on news that after the energy exploration and production company’s initial 2P sales gas reserves had increased by 8%, LPG reserves by 5% and light oil reserves by 27%. The Kupe gas and oil field, which lies 30km south of the Taranaki coast, has been in production since the wells were opened in December 2009. Pike River Coal (NZX: PRC ), the coal miner whose biggest shareholder is NZOG, rose 3.26% to 95 cents, the second biggest gain on the index. 

Tower (NZX: TWR ) rose 2.8% to $1.83 and jewellery retailer Michael Hill International (NZX: MHI ) rose 2.9% to 70 cents.

Air New Zealand (NZX: AIR ) rose 1% to $1.03 after the company said it will keep its 1.9% stake in Air Pacific, which is majority-owned by the Fijian government. The carrier is financial trouble and Qantas, which owns 46% of the business, is reportedly trying to sell out of it.

Shares in New Zealand Experience (NZX: NZE ) were unchanged at 32 cents after almost three-quarters of the company was put up for sale. Canada’s Garlow Management, the trustee for the Estate of George Ryerson Gardiner, told NZ Experience it wants to start sounding out expressions of interest for the 27.2 million shares it holds in the company worth $8.7 million at today’s price. NZ Experience operates the Rainbow’s End theme park in Manukau.

Shares in DNZ Property Fund will start trading on the NZX on August 16 once its planned capital raising of up to $45 million is completed. The actual price will be determined by an institutional book-build, but DNZ has provided an indicative range between 80 cents and $1.05 a share. Applications for the new shares will open July 19 and close August 4, with its existing 8,000 investors being offered up to $35 million. Any shortfall and up to $10 million will be offered to employees, institutions and primary market participants.

NZX (NZX: NZX ) paced declines with shares falling 2.6% to $1.53. Goodman Fielder (NZX: GFF ) fell 1.8% to %1.63 and shares in crystal oscillator manufacturer Rakon (NZX: RAK ) fell 1% to 96 cents.

Shares in AMP Office Property Trust (NZX: APT ) fell 1.4% to 71 as commercial property rates continued to come under pressure since 2008 and the start of the global recession.

Real Estate Institute data out today showed the housing market languished last month, with the volume of sales dropping to 4,575 from 5,206 a month earlier. That's the second lowest number of sales in a June month for at least a decade.

The national median sales price edged up to $352,500, and REINZ president Peter McDonald said the market has moved away from being speculative to one based more on need.

Economists predict the property market will stay weak for the rest of the year, though a limited number of new listings are likely to keep prices relatively stable.

Nufarm, the Australian agricultural chemicals manufacturer, has appointed Donald McGauchie as chairman and called a halt to trading in its securities pending a material announcement. McGauchie replaces chairman and former executive Kerry Hoggard who resigned yesterday due to ill health.

While Nufarm shares now trade only on the ASX, it has $251 million of debt listed on the NZX which last traded at 94 cents in the $1. Its shares last traded at A$5.24 (NZ$6.44). The company has requested a trading halt for two days on the ASX.

New Zealand retail sales rose 0.4% in May, lagging behind the consensus estimate in a Reuters survey of 0.6%, after weaker-than-expected sales at hospitality industries such as cafes and accommodation. Core retail sales, which exclude vehicle-related industries, dropped 0.2%. The NZSE Consumer Index, which tracks listed retailers, gained 0.8% to 1574.67, and has edged up 0.2% this year.

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