MARKET CLOSE: NZX 50 rises to 3-week high; banks gain
Feb. 3 – New Zealand shares rose, pushing the NZX 50 Index to the highest in about three weeks, amid perceptions the
downturn is already reflected in prices and as Australian banks rallied.
The NZX 50 rose 8.79, or 0.3%, to 2780.29 as at the 5 p.m. close of trading in Wellington. Within the index, 24 stocks
rose, 13 fell and 13 were unchanged. Turnover was NZ$77.5 million.
Westpac Banking Corp. rose 6% to NZ$20.79, leading the index higher after Commonwealth Bank of Australia said
first-half profit beat analysts’ estimates by 20%, stoking optimism the region’s lenders are weathering the global
financial market turmoil. Profit fell 16% to A$2 billion in the six months ended Dec. 31, CBA said yesterday. Australia & New Zealand Banking Group’s stock rose 4.5% to NZ$17.35.
Also helping sentiment today, the Reserve Bank of Australia cut its benchmark interest rate by 100 basis points to
3.25% while the federal government announced a A$42 billion fiscal stimulus package, helping underpin growth in New
Zealand’s biggest export market.
“At the margin it is all positive” for New Zealand stocks, said Paul Robertshawe, who manages NZ$250 million at Tower
Asset Management in Wellington.
Tower’s stock holdings have been “heavily defensive” but “we’re getting a lot closer to the point where we want to
change that and buy cyclicals,” Robertshawe said. “That’s our next move.”
Homeware and sporting goods retailer Briscoe Group gained 5.6% to 75 cents after managing director Rod Duke said
second-half profit won’t slump as much as first-half earnings, which tumbled 71%. Fourth-quarter sales slipped 0.9%, and
Duke said he was “reasonably satisfied” given the challenging retail sector.
Pumpkin Patch, the children’s clothing chain that counts Australia as its biggest market, jumped 5.7% to 93 cents.
Skellerup Holdings climbed 5.8% to 73 cents.
Robertshawe said he expects earnings downgrades during the earnings season that kicks of this month though “the market
is pricing in a lot worse than consensus.”
Nuplex Industries dropped 2.6% to NZ$2.60, extending its three-day slide to almost 12%, after the company lowered its
profit forecast, stoking speculation it may breach debt covenants. First NZ Capital analyst Jason Familton said the
company would have to reduce bank debt to stay within the terms of its loan agreements, according to the National
Business Review.
Tower’s Robertshawe said Nuplex has “a number of offsets” including asset sales, deferring capex or suspending
dividends. The company “is fairly close to the wind at a time when markets are pretty bleak – it’s another risk factor,”
he said.
Retail investors may be lured to fixed-income securities over shares after companies including Tower Ltd., Fonterra
Cooperative Group, New Zealand Post and Meridian Energy announced plans to sell notes or bonds.
More than half a billion dollars of such sales have been announced this week as corporates look to tap demand for
higher fixed returns in a market where deposit rates are dwindling.
In Australia, the S/ASX 200 Index climbed 0.3% to 3508.7. Commonwealth Bank surged 9.8% to A$29.05 after its profit forecast.
Woolworths climbed 1.7% to A%7.61 on the prospects of increased consumer spending from the government’s stimulus
package. Building-supplies company Boral Ltd. slipped 0.6% to A$3.13 after Standard & Poor’s lowered its credit rating outlook to ‘negative’ and cut its short-term rating.
In Japan, the Nikkei 225 Index fell 0.6% to 7824.67.
(Businesswire)