MARKET CLOSE: NZ shares rise as Steel & Tube bounces, Metro Glass gains

New Zealand shares rose as Steel & Tube Holdings rebounded from yesterday's selldown and as Metro Performance Glass gained.

The S&P/NZX 50 Index gained 21.26 points, or 0.3 percent, to 7,024.38. Within the index, 28 stocks rose, 13 fell and nine were unchanged. Turnover was $214.8 million

The biggest gainer was Steel & Tube, up 7.1 percent to $1.97. It hit a 15-year low yesterday after saying it was in talks with "multiple agencies" in New Zealand and China over pile casing that was to be used in bridges for the Huntly bypass that weren't up to scratch.

On May 18, Steel & Tube cut its earnings guidance by 10-to-15 percent and in April it agreed to only sell seismic reinforcing steel mesh that had been independently tested. The Commerce Commission is currently investigating possible misrepresentations of the mesh's performance characteristics that could breach the Fair Trading Act.

"The bargain hunters have come into the stock today, but I think we're likely to see a relatively volatile performance in Steel & Tube until this issue has been completely sorted out," said Grant Williamson, director at Hamilton Hindin Greene. "It's certainly disappointing from an investor's point of view, it's not a good look at all. People are obviously looking at that historical dividend yield, which is extremely attractive, but of course that could be out the window if there are any further developments. Steel & Tube have kept the market up to date with their feelings on the issue and that's maybe given a bit of heart to bargain hunters."

Metro Glass gained 3.5 percent to $1.79, with 15.7 million shares traded making it the busiest stock on the index. Crescent Capital Partners Management, a substantial shareholder which owns 8.3 percent of the stock, announced it agreed to sell its stake of 15.3 million shares to First NZ Capital for $1.726 per share in a block trade agreement, with settlement on or about June 8.

"The stock has weakened a little since it reported its financial result last week, the price has moved back up on the back of that and maybe the market did realise there was an overhang and that's now been removed," Williamson said. "The outlook for the stock with buoyant commercial and residential construction is quite positive, a number of analysts researched the stock and most of them are relatively positive on it."

Outside of that, the market was quiet with little news but positivity carried from Australia, Williamson said, where the S&P/ASX 200 was up 0.8 percent at 5:15pm New Zealand time.

Fonterra Shareholders Fund was unchanged at $5.70. Fonterra Cooperative Group has set a strike price for Fonterra Shareholders Fund units of $5.574 for unitholders participating in the dairy processor's dividend reinvestment plan. A final dividend for the last financial year is due for payment on June 7, with the strike price based on the individual daily volume weighted average sale price of FSF units in trading between May 27 and June 2, discounted by 2.5 percent.

Ebos Group rose 1.8 percent to $16.80, A2 Milk Co gained 1.3 percent to $1.54, and Trade Me Group advanced 1.3 percent to $4.74.

Heartland Bank was the worst performer, down 1.6 percent to $1.25. Kathmandu Holdings dropped 1.3 percent to $1.49 and Orion Health Group declined 1.3 percent to $5.24.

(BusinessDesk)