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MARKET CLOSE: NZ stocks rise as KiwiSaver speculation boosts bids

Monday 26th July 2010

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New Zealand stocks rose for the fourth time in five sessions, amid speculation more KiwiSaver money is set to find its way into the local equity market. 

APN News, Rakon, and Pyne Gould paced gainers on the day.

The NZX 50 rose 26.3 points, or 0.9%, to 3021.2. Within the index, 36 stocks rose, four fell and 10 were unchanged. Turnover was $32.4million.

KiwiSaver retirement funds typically received their tax rebates at this time of year, and are then redistributed and reinvested into investments including New Zealand equities.

“We seem to be seeing KiwiSaver money entering the market,” Tyndall NZ equity manager Ricky Ward says. “It was certainly noticeable at this time last year, and it looks to be the case again, with better price spreads across the board.”

The mood on the bourse was lifted further by the upbeat sentiment on global markets in the wake of positive corporate earnings in the US and news last week that just seven out of 91 European banks failed the stress test.

Rakon (NZX: RAK ) rose 3.1% to $1.01, extending its gain to a two-month high on optimism the manufacturer is actively looking for opportunities to expand its businesses after the company announced last week that it had acquired French rival, Temex.

APN News & Media (NZX: APN ) rose 5.4% to $2.55, Pyne Gould (NZX: PGW ) New Zealand’s largest rural services company, rose 3.1% to 41 cents, and Vector (NZX: VCT ) rose 2.5% to $2.08.

Auckland International Airport (NZX: AIA ) rose 0.5% to $1.97. The company has recently come under fire for its acquisition of a 25% stake in Queenstown Airport for $27.2 million, with Air New Zealand (NZX: AIR ) saying it would support an investigation by the ombudsman into the deal.

Ward said the deal was unlikely to be reversed given its size, but it would be “difficult for AIA to increase its stake any further”.

Michael Hill (NZX: MHI ) was unchanged at 70 cents after the jewellery retailer lowered the value at which it transferred its intellectual property to an Australian subsidiary by 6.8% to $274 million, resulting in changes to the transaction’s tax treatment, after concerns raised by the Australian Tax Office.

Shares in retail electricity supplier Pulse Utilities (NZX: PLU ) were unchanged at 45 cents after the company announced that it is looking to source up to $5 million from sophisticated investors in a convertible notes issue that will lead into a proposed share purchase plan later this year.

Pacing declines on the NZX 50, New Zealand Refining (NZX: NZR ) fell 4.4% to $3.08, Telstra (NZX: TLS ) fell 0.8% to $3.96, and children’s clothing retailer Pumpkin Patch (NZX: PPL ) fell 0.6% to $1.80.

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