NZ stocks: Investors react positively to Telecom result, push market higher

Investors reacted positively to Telecom's improved June year profit result today, pushing two of the sharemarket's key indices to new highs by the end of trade.

At 5pm, the benchmark NZSX-50 index was up 9.31 points at 2794.60, while the NZSX-All capital index was up 4.06 points at 941.77.

Both indices trumped their previous closing highs.

Turnover was $103.6 million and among the 161 stocks traded were 58 rises and 50 falls.

News of Telecom's June year net profit of $754m saw investors push the telco's shares up to 627c before they ebbed to close up 3c at 619.

There was $60.3m worth of Telecom shares traded today.

The firm's shares initially galloped higher on news it had hiked its quarterly dividend to 9.5c per share (cps) from 7.5cps.

ASB Securities head of advisory Stephen Wright said the Telecom result was better than expected and investors had embraced the dividend news.

"It's looking good," Mr Wright told NZPA today.

UBS Warburg broker Campbell Stuart agreed.

"You have a payout ratio which is reasonably high, which gives a high gross yield," Mr Stuart said.

"That in itself looks reasonably attractive relative to other places you can put your money."

Another mover and shaker on NZX today was Fletcher Building, its shares finishing up 5c at 492.

Investors were responding to publicity about the amount of work expected in the construction industry and the shortages it faced, particularly in Auckland.

"People are predicting it (Fletcher Building) will have a good result and so it should," Mr Wright said.

Insurer Tower rose 6c to 199 after yesterday saying it had paid off debt two years ahead of schedule.

There was also renewed media speculation about the prospects of Tower being a takeover target.

"If you're a shareholder there that's good news," Mr Wright said.

Shares in NGC were up 7c at 293 amid speculation it was in merger talks with publicly owned power giant Vector.

Finance industry sources said merger discussions were live, detailed and promising.

Shares in Freightways were up 3c at 258 after the Securities Commission today rapped ABN Amro Capital (Belgium) NV for misleading investors in the courier firm's prospectus last year.

The company, related to the parent of the Auckland based brokerage ABN Amro, sold most of its 19.2 per cent stake in Freightways this year despite a statement in the IPO issued last year that it would retain it for 12 months.

Other stocks on the move included: AMP up 7c at 700, Auckland International Airport up 4c at 711, DB Breweries up 4c a 946, Hellaby up 6c at 556, Mooring Systems down 6c at 343, NZ Refining up 100 at 2250, Sky City up 11c at 487, and Sanford down 5c at 463.

- NZPA