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CLOSE: NZ stocks perform well with offshore funds

Tuesday 7th September 2010

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New Zealand stocks rose for a fifth consecutive day, as fund inflows pushed the market into positive territory on a day absent of macro themes with U.S. markets closed and Australia awaiting the end to their political deadlock.

Air New Zealand (NZX: AIR ) led rises after it announced a price cuts to regional destinations.

The NZX 50 rose 30.9 points, or 1%, to 3174.1. Within the index 35 stocks rose, six fell and nine were unchanged. Turnover was $79.3 million.

“The volume has been light with no real direction with U.S. markets closed and Australia in limbo pending the announcement of their new government,” said Rickey Ward, domestic equities manager at Tyndall Investment Management. “The market has really just moved on fund flows with a further asset allocation into equities, which have helped to strengthen things.”

Ward said Australian markets had been directionless for much of the day, ahead of the announcement that Julia Gillard and Labor Party to form a new minority federal government.

Country independent Tony Windsor tipped that balance in Gillard’s favour after a tie in the August 21 election between Labour and the Liberal Party.

The Australian market was also muted after the Reserve Bank of Australia held interest rates steady at 4.5%, signalling some concern around the sustainability of economy growth.

Air New Zealand rose 3.9% to $1.35 after the airline announced that it was slashing the cost of lead-in economy fares, and introducing four new inflight product options for customers on flights between New Zealand, Australia and the Pacific Islands.

NZX (NZX: NZX ), rose 3.5% to $1.50 after August figures showed that the company had stemmed a slide in trading values and volumes last month, reporting a 21% gain to $1.76 billion in August from July. Trading was still down 27% from the same month last year.

Fisher & Paykel Appliance (NZX: FPA ) rose 3.9% to 54 cents, Nuplex (NZX: NPX ) rose 3% to $3.40 and children’s clothing retailer Pumpkin Patch (NZX: PPL ) rose 2.9% to $1.76.

Telecom (NZX: TEL ) rose $1.9% to $2.13.

NZ Oil & Gas (NZX: NZO ) rose 2.4% to $1.27 after the company announced that it buy back up to 8.5 million shares between September 10 and June 30 next year to bolster the company’s share price.

The current price "doesn’t reflect a reasonable current valuation of the company, even without taking into account the growth prospects," it said yesterday.

Tower (NZX: TWR ) rose 1.6% to $1.88. Ward said the stock had recouped much of the ground it lost yesterday as investors became more confident in the company’s ability to handle claims arising from the Christchurch earthquake.

Goodman Property Trust (NZX: GPT ) rose 1% to 96 cents after the company announced it had raised $45 million through a private debt issue.

The seven-year bonds will pay 7.58%, and are rated BBB+ Standard & Poor’s. The proceeds will be used to repay bank debt and diversify the trust’s funding sources. 

L&M Energy (NZX: LME ), the coal seam gas explorer, was unchanged at 12 cents after the company announced that it had raised $1.4 million in a share purchase plan, adding to its placement in July.

Some 15% of the company’s shareholders participated in the offer, buying shares at 9 Australian cents on the ASX and 11 cents on the NZX. Two months ago, the company raised A$7 million through a placement to institutional and sophisticated investors in Australia.

ING Medical Trust (NZX: ING ) fell 2.4% to $1.22, pacing declines on the NZX50.

Pyne Gould (NZX: PGC ) fell 2.3$ to 42 cents after company announced that its finance subsidiary, Marac Finance, had secured the rights to promote Holden New Zealand’s own financial services and insurance. Holden will now be added to the company’s existing car finance portfolio which covers GMAC New Zealand, Hyundai, Suzuki and Nissan.

Guinness Peat Group (NZX: GPG ) fell 1.6% to 63 cents, Hallenstein Glasson (NZX: HLG ) fell 1% to $3.90, and Telstra (NZX: TLS ) Telstra fell 0.8% to $3.60.

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