NZ stocks: Hefty trade in Powerco whips market higher

6.14pm

Offshore investors chasing an arbitrage profit in Powerco shares today whipped the sharemarket along at a cracking pace, the index of top 50 stocks closing on another high, a broker said.

Powerco shares closed down 2c at 210 after $87.8 million worth of them changed hands today.

The Taranaki-based firm is the subject of a takeover by Australia's Prime Infrastructure, which is offering 215c for each Prime share as it seeks to build on the 53.65 per cent holding it already has.

Offshore investors -- thanks to a Takeovers Code exemption -- can get all cash for their holdings, while kiwi investors are faced with a mix of bonds and cash.

The result -- a massive amount of Powerco shares have been sold by kiwi investors, many of them being swooped on by offshore buyers.

ABN Amro Craigs broker James Lock said trade in Powerco shares was once again the story of the day.

However, in the afternoon session one of the offshore buyers pulled out of the market, causing Powerco shares to dip.

"The big arbitrage buyers who were buying at 212 have just pulled out," Mr Lock told NZPA today.

"It could well be that this particular player is finished and maybe has left it to others who are buying at other levels," he said.

"It feels like something's going to break. It's going to be a very interesting process as to which way this one is going to go," he said.

"We're all watching it closely," he said.

On NZX today the NZSX-50 closed up 5.86 points at 2834.40, closing on a fresh high. The NZSX-All capital index was up 1.48 points at 942.05.

Market turnover was $208.2 million, and among the 151 stocks traded were 69 rises and 39 falls.

Market leader Telecom closed down 2c at 589 on turnover of $38.3m.

Mr Lock said stocks like Telecom, Fletcher Building and Fisher & Paykel Healthcare were attracting interest as Powerco investors chased yield stocks.

"I think investors are just focusing on the yield story."

Fletcher Building shares closed up 6c at 597, while those in Healthcare were up 10c at 1520 after their post run-up consolidation.

Shares in Waste Management gave up 4c to 528 after the firm said it had bought two small businesses in Australia and New Zealand.

Turners & Growers shares vaulted higher after debuting on the market's main board yesterday at 320c, closing up 5c at 340.

"The market is quite keen on that story. It's had a great debut," Mr Lock said.

Richina shares closed up 5c at 48 after the firm said it was significantly expanding in China with the $31m purchase of a 90 per cent stake in Shanghai Leather Co Ltd.

Auckland International Airport fell 1c to 714, after yesterday announcing it was looking at ways to improve road access to the airport.

Westpac shares closed up 10c at 1790 after the bank said it believed it had already paid the correct tax on transactions that are the subject of an amended tax assessment by the Inland Revenue Department.

Other shares on the move included: Air NZ down 9c at 168, Austral Pacific up 19c at 399, Ebos up 10c at 430, Michael Hill International up 14c at 725, Promina up 12c at 490, and TrustPower up 19c at 500.

Overseas, the Dow Jones closed up 58.84 points at 10,136.24, the Standard & Poor's 500 ended up 4.74 points at 1114.80, and the Nasdaq Composite closed up 24.07 points at 1893.94.

- NZPA