Fletcher Building’s share price continued to rally as investors re-assessed the company’s earnings prospects, while shares in Telecom fell after news that it had dipped out on being named for priority talks in the government's $1.5 billion ultra-fast broadband initiative.

Shares in Fletcher Building, the country’s biggest stock by market capitalisation, have rallied by $1.00, or 13.9%, since hitting a 52-week low of $7.18 last month.

But number two stock, Telecom, which had been enjoying a strong run since bottoming out at $1.82 in June, suffered after the government announcement. By late afternoon, Telecom was trading at $2.03, down 10c.

JB Were strategist Bernard Doyle said Fletcher Building was recovering from an oversold position. He said the company was also benefiting from a growing perception that the Reserve Bank would not raise its official interest rate next week, and would keep rates on hold for longer, providing a “decent pause” in its tightening cycle.
“Fletcher Building is our most interest rate-sensitive stock, so it’s good thing,” he said.
Mr Doyle said the Christchurch earthquake had helped to assuage investor fears about a perceived hole in construction activity, which was expected to occur next year.
“They are the ‘go to’ building company, so the earthquake was a reminder of that,” he said.
In Telecom’s case, the price was an appropriate response given the news, and a reminder that the company’s future will be dependent on its relationship with the government. “So it was a bit a of negative,” Mr Doyle said.
Telecom had rallied since June in anticipation of the announcement being more positive than it turned out to be, he said.