MARKET CLOSE: NZX 50 gains; Air NZ, Fletcher rise

MARKET CLOSE: NZ shares gain; Air NZ, Fletcher advance

June 22 – New Zealand shares rose after figures showed a pick-up in net migration and investors bet GDP data this week will show the economy didn’t slump as much as the central bank has predicted in the first quarter.

The NZX 50 Index rose 10.64, or 0.4%, to 2794.91. Within the index, 19 stocks rose, 12 fell and 19 were unchanged. Turnover was NZ$65 million, almost half of Friday’s NZ$113 million. Manufacturer Skellerup Holdings rose 3.6% to 58 cents, leading the index higher.

Air New Zealand Ltd. rose 2.2% to 92 cents after government figures showed a 1% increase in short-term visitors, led by tourists from Australia.

Fletcher Building Ltd., the nation’s biggest construction company, rose 1.4% to NZ$6.62 as the report showed the strongest growth in net migration for six years, stoking optimism demand is returning in the housing market. A net 2,690 migrants arrived last month, seasonally adjusted, the most since July 2003, according to Statistics New Zealand.

“People are reading that as being a better number,” said Paul Richardson, chief investment officer at BT Funds Management, which oversees about NZ$2.1 billion of investments. “It’s another thing that causes the market to think we’re not in Apocalypse Now.” Building, property and related sectors stand to benefit, with some flow-on to cyclical sectors, he said.

New Zealand’s economy shrank 0.7% in the first three months of this year, according to a Reuters survey. That’s better than the 1% contraction predicted in the Reserve Bank’s monetary policy statement this month. The GDP data is due on Friday.

Before then, the Federal Reserve Open Market Committee is scheduled to meet, with investors looking for any signs the U.S. central bank is preparing to end measures put in place to help buffer financial markets and the economy from the global slump.

European Union leaders over the weekend hinted at their willingness to unwind fiscal and monetary stimulus measures once the region starts to climb out of recession.

Still, signals are mixed. The World Bank today warned that the outlook for the global economy is “unusually uncertain” and lowered its forecasts for the world’s biggest economies. It now predicts Euro-region gross domestic product will shrink 4.5%, worse than its previous estimate of 2.7%. Japan’s economy may shrink 6.8% and the U.S. economy may contract 3%.

The Standard & Poor’s 500 slipped last week, having rallied for much of the past three months.

“We’re starting to see global equity markets run out of a bit of puff,” BT’s Richardson said.

Tourism Holdings, which operates a campervan rental business, dropped 6% to 46 cents. The company is due to exit the NZX 50 at the end of the month, to be replaced by fast-food operator Restaurant Brands New Zealand, which was unchanged at NZ$1.

NZ Farming Systems Uruguay fell 6% to 46 cents, the biggest decline on the NZX 50.

Among companies forced to sell shares at a discount to bolster their balance sheets this year, Nuplex Industries fell 3% to NZ$1.61 and Fisher & Paykel Appliances fell 1.5% to 66 cents.

Investors who bought shares in Nuplex’s sale in April for as little as 23 cents are sitting on a gain of 600%.

New Zealand Refining, the nation’s only oil refinery, climbed 2.6% to NZ$7, recovering some of the ground it lost on Friday as investors speculate about Shell New Zealand’s plans to sell its 17% stake.

Rakon Ltd., the maker of navigation system components, gained about 2% to NZ$1.55. Foodmaker Goodman Fielder climbed 1.2% to NZ$1.66.

“From a broad strategy, people have to start considering growth assets as part of their balanced portfolio,” Richardson said. Still, markets will likely remain choppy and BT has taken profits on some stock gains, he said.

(BusinessWire)

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