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MARKET CLOSE: NZ stocks hit monthly high

Thursday 29th July 2010

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New Zealand shares rose to the highest level in more than a month, after a decline in the Kiwi dollar perked investor appetite for companies earning overseas revenue.

Fisher & Paykel Healthcare and New Zealand Farming Systems paced the advance.

The NZX 50 rose 10.83 points, or 0.4%, to 3033 points. Within the index 18 stocks rose, 16 fell and 16 were unchanged. Turnover was $65.6 million.

The New Zealand dollar tumbled after Reserve Bank Governor Alan Bollard said interest rate increases will be more moderate than he had previously flagged and that the currency’s strength is inconsistent with the weaker economic outlook. The dollar was last trading at 72 US cents and tumbled almost three quarters of a US cent after the RBNZ statement.

“The market was largely influence today by the Reserve Bank talking down the New Zealand dollar, which has certainly assisted exporters, rather than the rate hike,” said Grant Williamson, a director at Hamilton Hindin Greene. “The hike was largely expected and pretty dovish, and I think investors realise that there are only certain pockets in the economy that are improving at the moment.”

Fisher & Paykel Healthcare (NZX: FPH ) that gets almost 80% of sales in U.S. dollars, rose 2% to $3.02. South American dairy farm operator, Farming Systems, rose 1.8% to 56 cents, exceeding the 55 cents offer from Olam International.

Steel & Tube (NZX: STH ) rose 2.3% to $2.25, pacing gainers on the NZX 50.

Shares in Telecom (NZX: TEL ) rose 1.5% to $1.99 after it announced that it is looking at strategic options for its Australian division, AAPT. iiNet may be lead bidder for part of the business, with shares in the Australian company suspended ahead of an announcement about a transaction.

Auckland International Airport (NZX: AIA ) rose 1% to $1.98 after the company announced that Qantas subsidiary Jetstar is to expand its trans-Tasman services and increase its domestic services.

A new daily Jetstar Auckland-Melbourne service begins in December, and a three times a week service to Cairns commences next April. There will be 24 weekly Wellington-Auckland flights from the start of November, up three, and Jetstar’s total New Zealand domestic operations will lift to 84 weekly return flights by the year’s end.

Air New Zealand (NZX: AIR ), which competes for passengers on the same routes, fell 0.8% to $1.20.

Ryman Healthcare (NZX: RYM ) was unchanged at $2.04. The company announced to shareholders at its AGM that it is looking to expand its retirement village business into the Australia market, its first offshore foray.

The NZX listed company, which has 21 villages with 4,400 units or rooms in New Zealand, has been carefully studying the Australian market for several years, said chairman David Kerr.

“Investors are pretty upbeat about Ryman, and with 15% growth, it has been a pretty spectacular performance over the last decade,” said Williamson. “They taking the low risk approach with their expansion plans, looking to build just one village in Australia, which investors will appreciate given the current climate.”

Leading declines on the NZX 50, whiteware maker Fisher & Paykel Appliances (NZX: FPA ). fell 3.6% to 52 cents, New Zealand Refining (NZX: NZR ) fell 1.6% to $3.02, and Guinness Peat Group (NZX: GPG ) fell 1.5% to 65 cents.

Mining company Pike Rover Coal (NZX: PRC ) fell 1% to 99 cents. The company had earlier announced that it was on target to start hydro-mining operations at its West Coast coal mine by September.

Pike River “still have a few hurdles to tackle before reaching full production, which is what investors are looking for, but they have been helped by the coal price which is up off historical levels,” said Williamson.

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