MARKET CLOSE: Telecom's broadband scoop drives market gains

Tuesday 24th May 2011

Telecom's success in snaring the lion's share of the Government's ultrafast broadband deal saw the local sharemarket buck overseas trends and lift the benchmark index.

Telecom's share price surged 15 cents, or 6.8%, to $2.43.5 after an announcement that the company's network arm Chorus, which must split off into a separate company, would build nearly 70% of the Government's ultra fast broadband initiative.

That drove up the NZX-50, which opened at 3554.138 and gained up to 14 points before ending the day up 5.4 points, or 0.15%, at 3559.551.

Turnover volume was 56.9 million shares worth $135 million. The 55 falls well outnumber the 23 falls in the 116 stocks traded.

A five point rise was pretty acceptable result because offshore markets weaker and Asian markets quite mixed, said Hamilton, Hindin, Greene director Grant Williamson

"Telecom was obviously the big news. The market really liked it, pushing the stock up 15-1/2 cents," he said, noting the last time Telecom was around the $2.43 mark was early in 2010.

"This is a pretty major initiative they have picked up, which could add significant revenue. The market always knew it was going to pick up a share of this, it just didn't know how much."

Guinness Peat Group (NZX: GPG ), with capital initiatives underway, had quite a bit happening, Williamson said, which saw a number of stocks traded but was unchanged at 83c.

Apart from Telecom (NZX: TEL ) not too much stock-specific news to keep investors focussed. Auckland Airport (NZX: AIA ), down 2.5c to $2.30 and Fletcher Building (NZX: FBU ), down 12c to $9.01, were probably followed the international trends lower, Williamson said.

"Telecom has really held the market up."

Goodman Property Trust (NZX: GMT ) was unchanged at 94, as was Kiwi Income Property Trust (NZX: KIP ) at $1.05.

Restaurant Brands (NZX: RBD ) was up 5c to $2.60, Hallenstein Glasson (NZX: HLG ) gained 6c to $4.17 and Telstra (NZX: TLS ) rose 5c to $4.05.

Goodman Fielder (NZX: GFF ) lost 5c to $1.33, Steel & Tube (NZX: STU ) shed 9c to $2.60, AMP (NZX: AMP ) bled 19c to $6.76 and ANZ (NZX: ANZ ) slipped 65c to $28.85.

Tower (NZX: TWR ) lost 4c to $1.79, PGG Wrightson (NZX: PGW ) 1c to 49, Air New Zealand (NZX: AIR ) lost 1c to $1.11 and Argosy Property (NZX: AGT ) was down 1c to 85.

NZPA

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