Market close: Shares rise – Warehouse, Kathmandu gain, Tower falls

BUSINESSDESK: New Zealand shares rose, paced by retailers Warehouse Group and Kathmandu. Guinness Peat Group gained after announcing it will kick off its share buyback this week and Tower dropped after reducing its guidance.

The NZX 50 Index rose 6.99 points, or 0.19%, to 3676.02. Within the index, 28 shares rose, nine fell and 13 were unchanged. Turnover was about $65.9 million.

Warehouse Group, the biggest retailer on the NZX 50, gained 3.2% to $2.91 ahead of its full-year results on Friday. Kathmandu, the outdoor clothing retailer that posts its results on September 20, increased 2.2% to $1.86.

Pumpkin Patch, the children's clothing retailer, rose 0.8% to $1.21. The stock has climbed almost 20% since posting full-year earnings last month that beat estimates.

Matthew Goodson, portfolio manager at BT Funds Management says that while expectations aren't "too high" for the Warehouse's result, there "seems to be some aggressive buying in Pumpkin Patch and Kathmandu".

Michael Hill, the jewellery maker, climbed 0.9% to $1.10. Briscoe Group, the home and sporting goods retailer, was unchanged on $1.96 ahead of its full-year results on Friday.

Guinness Peat Group, which now counts billionaire George Soros as a substantial shareholder, rose 3% to 51 cents. The investment firm announced it will start its share buyback this week, buying up to 10 million pounds of stock. GPG signalled its intention to do so at this year's annual meeting.

"This has been expected for some time. Their actual confirmation has seen the stock retrace some of yesterday's losses," Mr Goodson says.

The gainers were led by OceanaGold, which operates the Macraes gold field near Dunedin, up 3.4% to $3.32.

"The stock has been very strong of late, We have seen a reasonable move in commodity prices outside iron ore and coal," Mr Goodson says.

The decline was led by Tower, the insurance company that about one-third owned by Guinness Peat Group, down 3.3% to $1.78. It downgraded its annual profit expectations by $9.4 million due to the impact of Christchurch earthquake claims and concluded a strategic review. The stock has gained about 20% this year.

"They have never been particularly clear on the extract nature of their reinsurance coverage," Mr Goodson says. "As the share price reaction would suggest this is something of a surprise. This is an insurance company and there is no visibility from the outsider looking in."

Telecom, New Zealand largest listed company, fell 0.8% to $2.42. Fletcher Building, the country's biggest construction company, shed 1.2% to $6.52.

Investment Research Group was unchanged on 0.3 cents. The financial services company has sold most of its IRG Equity Investment Advisors unit to brokerage Forsyth Barr for an undisclosed sum. The stock has fallen about 50% this year.

Shares in A2 Corp, which claims a health benefit from the protein variant in its milk, climbed 8.7% to 50 cents. It more than doubled its annual profit to $4.4 million by expanding in Australia and is looking at building its footprint in China and the UK for its next stage of growth.