June 17, 2011 by
Filed under Finance
By Jason Krupp
June 14(BusinessDesk) – New Zealand stocks rose led by TelecomCorp. after legislation related to the ultrafast broadbandproject cleared its second to last hurdle in Parliament,lifting investors’ hopes the company may split in two beforethe end of the year. Pyne Gould Corp. fell.
The NZX 50Index rose 12.17 points, or 0.4%, to 3,488.85. Within theindex, 18 stocks rose, 22 fell, and 10 were unchanged.Turnover was $104.8 million.
Telecom, the country’sbiggest telephone company, rose 4.6% to $2.37 after theTelecommunications (TSO, Broadband, and Other Matters)Amendment Bill passed its second reading in parliament todayby 67 to 53, backed by the National Party, Maori Party, Actand United Future Party.
The bill is a key legislativestep which sets the framework for the $1.35 billionfibre-to-the-home, and only has to pass one more readingbefore it becomes law.
Air New Zealand Ltd., the nationalcarrier, rose 2.9% to $1.08 after the airline said it willcontinue to operate flights while Chile’s Puyehue-CordonCaulle volcano erupts. The airline says it is safe to flyunder the predictable ash clouds, even as several rivals,including Jetstar, Qantas and Emirates, chose to cancel someflights due to the eruption.
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The airline’s current priceto book ratio is currently cheap, according to David Price,a broker with Forsyth Barr, which he said was helping toimprove the attractiveness of the stock in the eyes ofinvestors.
“Airlines have always been a difficultindustry to invest in,” he said. “You invest in them duringa good time, not for a long time because there are onlyshort windows where you can make a very goodreturn.”
SkyCity Entertainment Group, the casino and hoteloperator, rose 2.3% to $3.62, with the stock continuing toattract buying interest after government selected thecompany as its preferred bidder to build a $350 millionconvention centre in Auckland. The casino operator hasoffered to foot the construction bill in return forregulatory concessions.
Heartland New Zealand Ltd., thewould-be bank formed by the merger of Marac Finance and theSouthern Cross and Canterbury building societies, rose 2.8%to 74 cents after it announced it was expanding its rurallending with a $100 million bid for PGG Wrightson’sfinance unit.
Chief executive Jeff Greenslade said theacquisition of PGG Wrightson Finance Ltd. will liftHeartland’s rural lending exposure to 21% from 6% -to-7%currently. He said the would-be bank ultimately wants abouta third of its loan book in rural loans.
“To see thefinance division go to Heartland was very little surprise toanyone,” Price said. “They were always the red hotfavourite.”
Pyne Gould, the financial services companywhich is helping fund the Heartland deal through a $10million private placement, fell 7.5% to 37 cents, leadingdecliners on the exchange.
Wrightson, the parent ofWrightson Finance which is also helping fund the salethrough a similar placement, fell 1.9% to 51 cents.
TowerLtd., the general insurer, fell 4.5% to $1.70, afteryesterday’s earthquakes in Christchurch raised freshquestion in investors’ minds about the ability of localinsurance companies to secure reinsurance cover.
GuinnessPeat Group, the investment holding company which owns a 35%stake in Tower, fell 0.6% to $81 cents.
Lyttelton PortCo., the South Island’s busiest port, fell 0.9% to $2.26after it said it had sustained further damage to itsfacilities after yesterday’s earthquakes, adding to the$22.6 million repair costs from the September and Marchearthquakes.
Jason’s Travel media Ltd., the NZAX-listedpublishing company, was unchanged at 30 cents after itsreported a 12.3% decline in full year net profit, with adecline in advertising spend weighing on the company’saccommodation directories business.
Net profit was$485,000 for the 12 months ending March 31, with revenue forthe period coming in 4.5% softer at 13.9 million compared tothe previousyear.
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