MARKET CLOSE: NZ shares gain for 3rd day; Skellerup rises

Tuesday 17th March 2009

New Zealand shares rose, pushing the NZX 50 Index to a month-high, amid optimism the world's biggest banks are returning to profitability, raising the prospect of an end to the global financial crisis.

The NZX 50 rose 20.39, or 0.8%, to 2564.723. Within the index, 28 stocks rose, 13 fell and nine were unchanged. Turnover was a paltry NZ$49 million.

Skellerup Holdings rose 7.7% to 56 cents, leading the index higher and trimming its decline this year to 29%. Carpet maker Cavalier Corp. rose 6.9% to NZ$1.54 and rural services company PGG Wrightson gained 6% to NZ$1.06.

Stocks advanced in Asia, joining a rally that started in Europe after Barclays said it had a strong start to the year and was considering selling an exchanged-traded funds unit, giving it enough capital to avoid a U.K. government bailout. It joined Citigroup, Bank of America and Deutsche Bank in making more upbeat comments about profits in the past two weeks.

The Nikkei 225 Index climbed 3.2% to 7949.13 in early afternoon trading, with consumer credit firm Credit Saison gaining almost 10% and Sumitomo Trust Banking climbing 8.7%. Australia's S&P/ASX 200 Index rose 3.1% to 3451.9 as banks rallied. Westpac Banking Corp. rose 3.4% to A$17.71.

The pendulum's turning toward equities as the risk goes out of bank stocks," said Ian Waddell, head of stock broking at Waddell Johnston McCarthy. "That's changed the environment."

Waddell said part of the change was with Goldman Sachs share price climbing above its NTA, stoking speculation it would raise more capital and repay TARP funds.

NZ Farming Systems Uruguay gained 5.3% to 60 cents, extending yesterday's gain after the company gained an investment grade credit rating to raise funds in Uruguay, allowing it to fund more dairy conversions after being thwarted in its fund raising last year.

Rakon, the navigation components maker, rose 3.4% to NZ$1.22, trimming its decline this year to 9.5%. Fletcher Building, the nation's biggest construction company, climbed 2.7% to NZ$5.70.

Shares have gained as investors have turned away from dwindling deposit rates in search of higher yields.

"Are they going to be happy with 3.5% to 4% on deposit?" says Waddell. They either buy some bonds or commit to equities."

It has been pretty easy to have big licks of money at the banks at 8.5% and that's been an easy bet," he said. "Now the real return potentially could be negative and people have to go up the risk curve."

AMP Office Trust rose 3.1% to NZ$1 and Telecom gained 3.1% to NZ$2.35. Guinness Peat Group rose 2.8% to 74 cents.

Fisher & Paykel Appliances fell 6% to 46 cents, the biggest decline on the index today. The manufacturer last week gained new short-term funding while it considers its capital raising options. The shares have tumbled 62% this year.

Businesswire.co.nz

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