New Zealand's Stocks Rise After Earthquake; Builders Rally, Insurers Fall
New Zealand’s NZX 50 Index of stocks climbed in Wellington, led by building-related companies, after an earthquake hit Christchurch, New Zealand’s second-biggest city at the weekend. Tower Ltd., an insurer and fund manager, plunged.
Steel & Tube Holdings Ltd., a local distributor of roofing iron and reinforcing steel, jumped 7.7 percent, the biggest gain on the benchmark index. Fletcher Building Ltd., New Zealand’s largest supplier of building products, advanced 5 percent. Tower sank 3.1 percent and asset manager AMP Ltd. fell as much as 4.6 percent before paring losses.
“Earthquakes, though normally terrible in terms of the human costs, often result in a lot of rebuilding activity, and tend to be positive for sharemarkets unless there’s total devastation, where activity is totally wiped out,” said Shane Oliver, AMP Capital Investors Ltd.’s Sydney-based head of investment strategy.
New Zealand’s NZX 50 Index gained 1.2 percent to 3,143.14 at the 5 p.m. close of trading in Wellington. The gauge has lost 2.7 percent this year on concern slowing exports, which make up 30 percent of the economy, may curb New Zealand’s economic recovery, and amid speculation the global economy is slowing.
Steel & Tube jumped 7.7 percent to NZ$2.37 today, and Fletcher Building rose 5 percent to NZ$8.14.
Christchurch, the South Island city of about 348,000 people, was placed under a state of emergency after the magnitude 7.0 earthquake that closed the central business district. The quake struck at 4:35 a.m. local time on Sept. 4, cutting power, damaging roads, rupturing sewer lines and water pipes and ripping facades from buildings.
New Zealand faces a NZ$2 billion ($1.4 billion) damage bill, according to government estimates.
“There’s a major rebuild job here in Christchurch,” New Zealand Prime Minister John Key said in a television interview yesterday. “You can see the superficial damage. A lot of homeowners will over time find damage that they’re not expecting.”
Insurance providers slumped. Tower dropped 3.1 percent to NZ$1.85, while AMP, which sells insurance policies in New Zealand with Vero Insurance Ltd., lost as much as 4.6 percent to NZ$6.30. The shares ended down 0.3 percent at NZ$6.58.
“All that will come out of this is better, stronger buildings, which is probably a good thing,” said Oliver. “I can’t see any other lasting impact on New Zealand. It’s obviously negative for insurers.”
New Zealand reported a trade deficit for the first time in seven months in July as increased imports of vehicles and petroleum products offset gains in exports of milk powder, butter and cheese.