NZ stocks gain before central bank rate cut

Published: Thu 4 Dec 2008 01:32 PM
MARKET CLOSE: NZ stocks gain before central bank rate cut
Dec. 3 – New Zealand stocks rose for the first day in three amid expectations the central bank will slash the official cash rate as much as 1.5 percentage points tomorrow to revive economic growth.
The NZX 50 Index rose 55.643, or 2.1%, to 2706.788. Within the index 35 stocks rose, nine fell and four were unchanged. Guinness Peat Group led gainers, rising 6.3% to NZ$1.01. Property for Industry led a rally in property investors, rising about 5% to NZ$1.06. ING Property Trust rose 3.1% to 67 cents.
Central bank Governor Alan Bollard will lower the OCR to 5% tomorrow, according to a Reuters survey. That would mark the biggest cut since the OCR was introduced in 1999. Central banks globally have slashed interest rates as the world’s biggest economies sunk into recession. Australia, the biggest market for New Zealand goods, cut rates 100 basis points this week.
“We're in fairly extreme times which call for extreme measures," said Craig Brown, who helps manage about NZ$2 billion at ING New Zealand. “More job cuts is the big risk. People start spending less and it becomes a vicious cycle.”
In Sydney, the S/ASX 200 Index rose 0.4% to 3542.7 after government figures showed that economy rose a smaller-than-expected 0.1% last quarter. Qantas Airways gained 2.2% to A$2.30 after confirming it discussions with British Airways about a potential merger. Transfield Services jumped 31% to A$1.79 after ABN Amro raised its rating on the stock to ‘buy’ from ‘hold.’ Japan’s Nikkei 225 Index advanced about 1% to 7941.8 in mid-day trading.
PGG Wrightson, the biggest rural services company on the NZX 50, fell 4.4% to NZ$1.53 after the ANZ Commodity Price Index declined 7.2% last month, stretching its four-month slide to 21%. The declining New Zealand dollar meant the local currency index fell only 1.8%.
Auckland International Airport, the nation's busiest gateway, gained 4.3% to NZ$1.71 after announcing it is reorganising into three business units, recognizing the growing importance of its property holdings while winding back its engineering unit.
Air New Zealand rose 1.2% to 86 cents after Forsyth Barr analyst Rob Mercer was reported as saying a potential merger between British Airways and Qantas was more likely to signal consolidation in the industry facing a downturn than a move to take on the New Zealand carrier.

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