NZ stocks: Contact's busy day gives market a lift

Contact Energy was still the main game in town yesterday, helping boost usually quiet Monday turnover to a respectable $72.65 million.

Telecom lost 7c to close at $4.32, but the NZSE-40 capital index ended the day up 7.31 points, or 0.38 per cent, at 1910.01.

The small companies index was up 75.12 points, or 1.44 per cent, at 5307.94.

Topping the 38.45 million stocks traded was Telecom's $19.95 million-worth followed by Contact with $13.51 million.

Contact ended up 7c at $3.98, 13c above the $3.85-a-share takeover offer made on Friday by parent company Edison Mission.

Andew Kelleher of ASB Securities said the advice yesterday not to sell Contact shares indicated that many in the market thought Edison's offer was too low.

"A few brokers around the traps are coming out and issuing 'don't sell' recommendations, which has thrown a bit of a spanner in the works," Mr Kelleher said.

"It will be interesting to see how that's played out from Edison Mission's point of view, because there are a few days to go before they come on to the market.

"But the indications are that certainly more than one broking shop out there thinks that there is slightly more value in it than the $3.85 offered.

Don Turkington of Forsyth Barr said it appeared US-based Edison, which already has a 51 per cent stake in Contact, wanted complete control of the company's cash flows, which are expected to be healthy after sky-high power prices this winter.

Pushed too far, Edison could choose to walk away, but Dr Turkington also said investors should not feel like they had to sell at the present time.

Mr Kelleher said the rest of the market was buoyant, with a pleasing turnover spread across quite a few quality stocks.

Among the upwardly mobile were The Warehouse, up 23c at $6.28, Sky City casino, up 10c at $11.35, INL, up 15c at $3.35, Auckland Airport, up 14c at $3.39, and TrustPower, up 10c at $3.30.

On the down side were Baycorp, 25c down to $11.75, Fisher & Paykel, 16c to $13.64, and Fletcher Building, 2c to $2.62.

Ports of Auckland, which said at its annual meeting yesterday it would return $132 million in capital to shareholders, closed up 7c at $5.64.

- NZPA