NZ stocks: Telecom spurs index to 9-month record

The sharemarket reached its highest level in nine months yesterday, buoyed by further gains in market leader Telecom.

The NZSE-40 index rose to 2117.44 - its highest since April last year - before settling to close 6.31 points up at 2113.51.

Turnover was relatively light at $52 million, the lion's share of it in Telecom.

Don Turkington, executive director of Forsyth Barr, said the rising market reflected Telecom's recovery.

"Getting back to this 2100 level is the recovery of Telecom especially, and Carter Holt," he said.

Telecom closed up 3c at $5.45 on turnover worth $32 million.

The company, which makes up 22 per cent of the top 40 index, has added 10 per cent to its value since last Friday, aided by improved global sentiment towards telecommunications stocks.

"It's had another very good day, in fact it did hit $5.50," Dr Turkington said.

"It seems to be rising on sentiment rather than new information, we're not hearing a lot about booming sales or anything."

Dr Turkington said the local market could continue heading higher in coming days, but volumes were very skinny and it would be at the mercy of changes in Telecom's price.

"Because it's such a small market it's massively influenced by Telecom.

"The market is very thin ... so especially at this time of year you can get some quite exaggerated movements."

Other factors contributing to yesterday's rise were new investments by a government pension fund and the country's relatively strong growth outlook.

The market has gained 13 per cent in the past three months, coinciding with the NZ Government Superannuation Fund's decision to invest in local and international shares.

Last year, Finance Minister Michael Cullen set up the GSF Authority to oversee a change in investment strategy for the $3.4 billion fund that had previously held only Government bonds.

Within two years the authority aims to have about $1.01 billion invested in local shares, about $1.7 billion in foreign stocks and the rest in bond markets at home and overseas.

In other movements, Carter Holt Harvey, the second largest stock on the top 40 index, added a cent to $1.82, The Warehouse climbed 5c to $6.75, Contact Energy gained 3c to $3.93 and Baycorp Advantage rose 2c to $7.44.

Fisher & Paykel Appliances was another top performer, closing up 15c at $11.05.

Dr Turkington said the stock had looked a bit cheap since its split from the wealthier Healthcare division late last year.

Appliances also owns 20 per cent of the Healthcare division, so F&P Healthcare's 10c rise to $16.40 had assisted the stock, he said.

Among the second liners, Waste Management was steady at $3.15, Fletcher Building slipped 4c to $2.92 and Fletcher Forests shed 1c to 23c.

- NZPA