New Zealand shares rose, led by Argosy Property Trust and Telecom, pushing the benchmark NZX 50 Index to a 2 1/2-year high amid signs investors are becoming more bullish about the outlook for the domestic economy.
The NZX 50 gained 30.12, or 0.9 per cent, to 3558.87, the highest close since May 2008. Within the index, 30 stocks rose, nine fell and 11 were unchanged. Trading was valued at $131.7 million.
Argosy gained 3.9 per cent to 83 cents after rival property investor DNZ Property Fund said it approached the trust with a merger proposal which could reap synergies including reduced management fees. Argosy responded today that the approach was only verbal and its investors may be better served with it proceeding with internalising its management contract. It was open to receiving a written proposal though.
Telecom climbed 3.8 per cent to $2.32, the highest since January 28. The stock has been driven up by expectations the government is shortly to announce Telecom's share of the ultra-fast broadband rollout.
"You would have to say a fair bit of that good news is built in" to the share price, said Craig Brown, who helps manage $1 billion of shares at OnePath, a unit of ANZ National Bank. There's also "a fair bit of uncertainty" with "no visibility in their earnings stream over the next 12 months."
With three-quarters of Telecom's stock held offshore there's also a risk some investors will be less willing to hold a company that would split into two smaller businesses to participate in the UFB rollout, he said.
PGG Wrightson rose 1.9 per cent to 54 cents a day after announcing the acquisition of another seeds business in Australia. SkyCity Entertainment Group gained 1.1 per cent to $3.75 and has gained about 8 per cent in the past month.
OnePath's Brown said the broader market is starting to benefit from perceptions New Zealand's economy has some favourable winds behind it including low interest rates and high commodity prices. While high prices are offset by a strong kiwi dollar, the currency has remained weak against its Australian counterpart, helping exports to New Zealand's biggest market.
There are also signs the housing market may be stabilising and the rebuild of Christchurch will also be a fillip for the economy, Brown said.
"There's a scenario where you can paint not a bad outlook," he said.
Auckland International Airport gained 1.6 per cent to 2.30. Executives of the nation's biggest gateway have been giving presentations to retail investors where they've touted the company as a way to get "low-risk exposure" to the "Asia-Pacific growth story."
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The "long-term prospects for our airports and the markets they serve are strengthening," the company said, according to presentation notes for chief executive Simon Moutter and chief financial officer Simon Robertson.
Rubicon, the forestry-based biotech company, tumbled 37 cents to 68 cents, shedding more than a third of its value, after announcing that its 33 per cent-owned US tree seedling company ArborGen has shelved an initial public offering because of what it called weak conditions on Wall Street.
The move leaves a question mark over how ArborGen will source needed capital and provided earnings growth for Rubicon. Its partners in ArborGen are International Paper and MeadWestvaco. They are now considering a mix of annual partner funding, new debt or finding new capital to meet ArborGen's short-term funding needs.
Rakon, the maker of crystal oscillators used in smart phones and navigation systems, rose 1.6 per cent to $1.26, extending its gains on optimism about plans to triple production in China to meet rising demand.
The company was named New Zealand's leading technology company over the past decade in an award this week.
