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MARKET CLOSE: NZ shares rise to 4-year high; TEL, FBU gain

MARKET CLOSE: NZ shares rise to four-year high before Telecom, Fletcher results

Aug. 20 (BusinessDesk) - New Zealand shares rose to their highest level since May 2008 on expectations the biggest companies on the bourse, Telecom and Fletcher Building, will post earnings growth this week, while Rakon announced expansion in China.

The NZX 50 Index rose 21.42 points, or 0.6 percent, to 3661.08. Within the index, 23 stocks rose, 17 fell and 10 were unchanged. Turnover was $96.5 million.

Telecom, the telecommunications company rose 2.1 percent to $2.74 and has gained about 30 percent this year. The company posts its full-year results on Friday and Forsyth Barr analyst Guy Hallwright has forecast a 14 percent increase in sales to $4.7 billion and a 37 percent rise in reported profit to $330 million.

Fletcher Building, New Zealand largest construction company, gained 0.3 percent to $6.57, the highest in more than four months. Its full-year results are set for release on Thursday and will show an 18 percent increase in sales and a 0.7 percent rise in earnings before interest depreciation and amortisation, according to Forsyth Barr.

"Both stocks have benefitted from increased investor interest of late," Solly said. "In both cases there has also been a change in management and it will be interesting to see what that means for strategy."

Fletcher Building has named Mark Adamson Formica executive as new chief executive, replacing Jonathan Ling starting on Oct.1. Simon Moutter will become Telecom CEO on Sept. 1.

Chorus, the telecommunications network operator spun out of Telecom last year, increased 1.9 percent to $3.25.

Rakon, the communications components maker which dropped out of the NZX 50 Index in June, soared 19 percent to 50 cents. The company today announced a deal with Huawei Technologies, quadrupling its sales to the Chinese-based company to US$56 million over the next five years.

The gainers were led by Pumpkin Patch, the children's clothing retailer, up about 5 percent to $1.06. OceanaGold Corp, which operates the Macraes gold field near Dunedin, climbed 4.5 percent to $3.03.

The decline was led by Cavalier Corp down 5 percent to $1.66. The Auckland-based carpet maker turned a full-year loss of $1.6 million in the 12 months ended June 30, on costs to restructure its business in response to deteriorating trading conditions in New Zealand and Australia.

"They are good operators but it is a difficult area at the moment," Solly said.

NZX, the stock exchange regulator, fell 3.5 percent to $1.10 after posting a 28 percent drop in first-half profit as revenue growth stalled and expenses rose, squeezing its earnings margins. Profit was $3.25 million in the six months ended June 30, from $4.5 million a year earlier.

"The outlook statement was pretty murky - that's the nature of capital markets at the moment," Solly said. "The CEO was straight with answers and that is refreshing."

Shares in Hallenstein Glasson Holdings fell 2.1 percent to $4.30 even after the clothing chain said its full-year earnings rose as much as 14 percent on increased sales and the contribution from insurance relating to the Christchurch earthquakes.

PGG Wrightson, New Zealand's largest agricultural company, fell 3 percent to 31 cents. Vector, the electricity and telecommunications networks owner, slipped 0.7 percent to $2.72.

(BusinessDesk)

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