SHARES in Suncorp-Metway rose 9 per cent after it arrested its recent share price fall by completing the underwriting on its dividend re-investment plan early.
Suncorp shares finished 75c, or 8.98 per cent, firmer at $9.10, recovering from Thursday's 5.7 per cent plunge that saw the stock reach an eight-year intra-day low.
Suncorp has under-performed the market by 22 per cent since reporting its 2008 result on August 26 and by 12 per cent over the past week, JBWere said in a client report yesterday.
JBWere upgraded its recommendation to "hold" based on the risk of a takeover bid given the stock is now cheap to its peers.
Investors bolted from Suncorp on Thursday in disbelief over its one-line statement that it had no material exposures to bankrupt Lehman Brothers or beleaguered US insurance giant AIG.
"No one believes what (Suncorp) management is saying over their risk exposures," said Mark Topy of Paterson's Securities.
Yesterday, the stock rebounded with the DRP announcement and amid a 4 per cent rally across the market on news that central banks would pour $225 billion into the global banking system to restore investor confidence.
Suncorp executives were in damage control on Thursday, reaffirming earnings guidance and pointing out Suncorp's "very small" exposure to Lehman, lack of exotic instruments, and conservative LVRs (loan to valuation ratios) surrounding troubled Queensland property group Raptis.
Yesterday, Suncorp was back in damage control mode again.
Chief executive John Mulcahy said the DRP placement was in the best interests of all shareholders in view of some of the trading patterns in Suncorp stock over the fortnight the DRP underwriting process has been under way.
The DRP underwriting process, which had been scheduled for completion on October 6, required Suncorp to sell 1.5 million shares a day which depressed the share price.
Until yesterday, the company had placed 13.5 million shares at about $9.55 each.
A placement of 23.1 million shares to existing shareholders at $8.35 a share was made on Thursday to complete the process.
- AAP
SUN Price at posting:
$8.54 Sentiment: Buy Disclosure: Held
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