NZ Stocks Gain on Citigroup Rescue
MARKET CLOSE: NZ Stocks Gain on Citigroup Rescue; Rakon up
Nov. 25 – New Zealand stocks rose, led by some of the most heavily punished companies in the recent market rout after the U.S. government agreed to provide aid to Citigroup, boosting confidence in the U.S. economy and global demand.
The NZX 50 Index rose 59.369, or 2.3%, to 2634.878, the first gain in seven sessions. Within the index, 37 stocks rose, seven fell and six were unchanged. Pumpkin Patch rose for a second day after announcing plans to buy back 5% of its stock over the next 12 months. Rakon, which has shed more than 70% of its value this year, jumped 7.7% to NZ$1.12 Pike River Coal advanced 7.5% to NZ$1 as commodity prices rallied.
Australia’s S&P/ASX 200 Index rose 4.3% to 3574.4. BHP Billiton and other resource companies advanced as commodity prices gained. Japan’s Nikkei 225 Index rose 2.4% to 8099.5 in mid-day trading. Stocks in Asia followed the rally on Wall Street that sent the Standard & Poor’s 500 Index up 6.5% on news of the Citigroup plan. Some investors said the global rally will run out of steam again.
“We’re not yet convinced that this is going to be any more than a very intermediate-type rally,” said Angus Gluskie, managing director at White Funds Management in Sydney. “When you look at the fundamentals I don’t think anyone is going to say we will see a massive rebound.”
Abano Healthcare rose 1.1% to NZ$4.55 after chair Alison Paterson reiterated the healthcare investor’s forecast for full-year profit growth and said it has ample long-term funding in place.
“The extent of the current economic downturn is unprecedented and it represents a material risk factor for all New Zealand businesses,’ Paterson said.
Fisher & Paykel Appliances, which has built its presence in the U.S. by opening plants, acquiring businesses and licensing its technology, surged 10% to NZ$1.37. The shares have tumbled 65% this year.
Nuplex Industries led declining shares, after the manufacturer of resins and ingredients used to make paint, printing ink and adhesives, cut its earnings forecast for 2008/09 by as much as $25 million. Weak demand in the past two months prompted the company to reduce its earnings forecast to as little as $105 million, a fall of over 19%. Nuplex’s share price tumbled 15% to NZ$3.82.