NZ stocks: Market opens positively as Air NZ grabs limelight

12:00 pm

All eyes were focused on Air New Zealand this morning after the Government announced the amount it was willing to pay for its 82 per cent stake in the airline.

The Government has agreed to pay 27c per share as part of its $885 million bailout of the troubled airline, and has set aside another $150 million if needed.

Overall, the NZSE40 capital index was up 8 points to 2017 on moderate volumes of $17.95 million.

Just after 11am Air NZ domestic-only A shares were down 1c to 36, but the freely tradeable B shares were up 1c to 39.

"The B shares are very strong... and that's in spite of (Finance Minister Michael) Cullen saying the company faces considerable uncertainties and may need to put more equity into it," Alan Wills, a broker with Forsyth Barr Frater Williams, said.

"But the market seems to be ignoring that and looking at other issues.

"I think it indicates that the company's financial situation has stabilised but going forward, I think there's a lot of uncertainty over both the viability of a smaller airline which has really only got a New Zealand focus now, and secondly the overall outlook for tourism, both inbound and outbound."

Elsewhere in the market, Telecom bounced back strongly from yesterday's losses, gaining 7c to 480 after its American Depository Receipts rose in the US.

Star performer Fisher & Paykel Healthcare touched new highs, rising to 1785, an increase of 35c. Its companion, F&P Appliances, also improved 30c to 920.

Mr Wills said F&P Healthcare's "amazing" continued rise was paying dividends for the appliance division, which was now playing catch up.

Analysts believe the appliance section, which holds a 20 per cent stake in the healthcare business, still had a good underlying business of its own and was worth closer to $10.30-40.

Australian-based Telstra remained steady at 680 but some institutional offmarket trading had seen $3.5 million worth of shares change hands.

Carter Holt Harvey sunk 2c to 161 after firming 4c yesterday.

AMP lost 16c at 2320 but AMP Office Trusts was untraded after reporting a record net profit of $20.9 million .

The Warehouse was up 2c to 645. Brokers believed the company was in for a good Christmas but there were reservations about its Australian operations.

There were 33 rises and 24 falls on 95 stocks traded.

Brokers were anticipating some relatively significant stock changes later in the week, when the impact of a revamped Morgan Stanley Composite Index came into play.

Two stocks - Rubicon and Brierley Investments - will be dropped from the provisional index on Friday, while Air New Zealand Bs, Baycorp, Independent Newspapers, Sky City Casino and Tower will be added.

- NZPA