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MARKET CLOSE: NZX 50 snaps 4-day slide as earnings awaited; Mainfreight gains

Tuesday 7th July 2009

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New Zealand’s NZX 50 Index snapped a four-day slide in light trading as investors await corporate earnings for the second quarter. Mainfreight Ltd. and New Zealand Refining Co. led gainers today.

Mainfreight (NZX: MFT ), the biggest trucking company on the NZX 50, rose 2.7% to $4.26. The company is rated ‘outperform’ based on average recommendation of seven analysts’ ratings compiled by Reuters. Three rate it a ‘buy.’

New Zealand businesses became less pessimistic about the economic outlook and their earnings in the second quarter, according to the New Zealand Institute of Economic Research. A net 25% of companies surveyed expect the economy will worsen over the next six months, an improvement from the 65% who saw worse times ahead in the first quarter.

“It’s a positive sign but even the NZIER came to the conclusion we’d be in recession until the fourth quarter,” said Stephen Wright, private client adviser at ASB Securities in Auckland. “We have to wait for corporate earnings” which won’t be too bad if there are “no more unpleasant surprises,” he said.

New Zealand Refining (NZX: NZR ), the nation’s only oil refinery, gained 2.2% to $7. Clothing chain Hallenstein Glasson Holdings (NZX: HLG ) rose about 2% to $2.60 and ING Property Trust (NZX: ING ) gained 1.6% to 63 cents.

PGG Wrightson (NZX: PGW ), the nation’s biggest rural services company, rose 1.9% to $1.10. The company has already said second-quarter earnings declined to between $30 million and $32 million, from last’s trading profit of $39.2 million.

Marlin Global Ltd (NZX: MLN ), the investor in overseas stocks managed by Fisher Funds Management, rose 2.7% to 77 cents after the company said a shareholder, Gary Cross, was trying to muster the 5% shareholder support needed for a special meeting to vote on delisting and becoming an open-ended fund.

Biotech company Rubicon Ltd., whose investments include stakes in wood products group Tenon and ArborGen, climbed 6.3% to 85 cents. The Takeovers Panel released a determination into a partial takeover by funds associated with American David Knott, which concluded the fund had inadvertently votes their own shares in favour of the deal.

Fletcher Building (NZX: FBU ), which operates construction and building products businesses, fell 0.9% to $6.41 after a report showed Australia’s building industry shrank as a faster pace last month. A survey by the Australian Industry Group and Housing Industry Association showed a 4.3 point drop in the association’s index to 42.6, marking the 16th straight month of contraction.

Steel & Tube Holdings (NZX: STU ), which sells steel building supplies such as reinforcing rods, fell 1.4% to $2.76.

NZ Farming Systems Uruguay (NZX: NZS ) fell 8% to 45 cents, leading the NZX 50 lower.

Foodmaker Goodman Fielder (NZX: GFF ) fell 1.8% to NZ$1.62 and jeweler Michael Hill International shed 1.6% to 62 cents. 

ING New Zealand expects companies in the NZX 50, on average, to post a 4.2% decline in second-quarter per-share earnings. The results season kicks off next month. Before then, U.S. companies are due to post their second-quarter results, with aluminium producer Alcoa the first major to report. “The U.S. will either have stimulus or depression earlier than us,” Wright said.

The NZX 50 rose 3.27, or 0.1%, to 2746.24. Within the index, 17 stocks fell, 16 rose and 18 were unchanged. Turnover was $64.7 million.

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