MARKET CLOSE: NZ stocks snap 3-day slide; NZO up

MARKET CLOSE: NZ stocks snap 3-day slide; NZO, ALF, NZS rise

By Jason Krupp

July 20 (BusinessDesk) – New Zealand stocks snapped a three-day slide, led by NZ Oil & Gas, amid speculation keenly awaited results of stress tests for European banks this week will alleviate global fears of contagion from the region’s debt crisis.

The NZX 50 rose 27.6 points, or 0.9%, to 2992.2. Within the index 24 stocks rose, 12 fell, and 14 remained unchanged. Turnover was $ 68.3 million.

In all, 91 European banks will be tested for among other things, sovereign default risk, with the results to be published after the close of European trading on Friday, the Committee of European Banking Supervisors said this week. The detailed results will help investors and traders gauge the likely success of the European Union’s 750 billion euro bailout fund.

“If you go back to March last year when the U.S. did similar thing, it was a circuit breaker for the banking sector,” said Keith Poore, head of investment strategy for AXA Global investors. “I don’t think the European results will be as strong as that but it will show that the banks are in pretty good shape, and I think the market is going to like it.”

Pacing gainers on the day, energy exploration company NZ Oil & Gas, rose 3.3% to $1.25, regaining some of the ground it lost yesterday on news that the second of two exploration wells on the highly prospective Tui oil and gas zone had failed to find any evidence of hydrocarbons. The company owns a 12.5% stake in the field.

Rakon Ltd., the crystal oscillator manufacturer, rose 3.3% to 95 cents, and Tower Ltd., the insurer and wealth manager, rose 2.8% to $1.85.

Telecom Corp., New Zealand’s largest telecommunications provider, rose 2.7% to $1.93. Alcatel-Lucent New Zealand, Telecom’s technology partner on their XT Network, said in its report to the Companies Office that the two had agreed to settle their dispute over network outages.

Allied Farmers Ltd., the finance company which took over the Hanover loan book last year, rose 4.6% to 46 cents on news that the company had gained a six-month extension of its loan facility with Westpac, giving the finance company more time to repay debt and restructure its business.

Allied has $16.5 million outstanding and had an overdraft facility of $2.5 million that was set to expire on July 1. The extension, its second, is until March 31.

New Zealand Farming Systems Uruguay Ltd., the South American dairy farm operator, rose 2% to 54 cents, adding to yesterday’s 29% surge after Singapore’s Olam International said it wanted to acquire shares in the company it didn’t already own at 55 cents apiece.

Pacing decliners on the day, NZX Ltd., which operates the New Zealand Stock Exchange, fell 2.7% to $1.46, PGG Wrightson Ltd., the rural services company, fell 2% to 49 cents and ING Medical Properties Trust, which invests in health sector related properties, fell 1.6% to $1.20.

Guinness Peat Group Plc, the U.K.-based investment group, fell 1.5% to 65 cents, Vector Ltd., the Auckland-based utility, fell 1.4% to $2.11, and New Zealand Refining Co., which operates an oil refinery in Whangarei, fell 0.9%to $3.26.

China’s Bright Dairy & Food Co., which has agreed to buy a majority shareholding in Synlait’s milk processing vehicle Synlait Milk Ltd. for $82 million, said it will support plans to float the company on the NZX within the next five years.

If Synlait Milk does list, Bright Dairy will be entitled to subscribe to new shares to keep its 51% holding, which the Chinese company said is a long-term investment. Synlait, which abandoned a $150 million share sale to list on the NZX last year due to a soft response from investors, is seeking funds to build a second drier at its main site to help boost its milk powder capacity.

Nelson-based conglomerate Talley’s Group Ltd this evening launched a full takeover bid for the remaining 23.7% of AFFCO Holdings Ltd that it doesn’t already own, offering shareholders the current trading price of 37 cents a share.

The price is the same as that offered for 23.46% of AFFCO belonging to the Spencer family vehicle, Toocooya Nominees Ltd on June 11, to add to the 52.8% already owned by Talley’s Group.

(BusinessDesk)

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