MARKET CLOSE: NZX 50 falls for 2nd day; Telecom slips

Tuesday 12th May 2009

Shares fell, pushing the NZX 50 Index lower for a second day, amid concerns optimism that the world has past the worst of its economic slump may be premature with stocks having rallied too hard given the ongoing recession.

The NZX 50 fell 16.52, or 0.6%, to 2812.69, extending its slide from the six-month high reached last week. Within the index, 29 stocks dropped, 12 rose and nine were unchanged. Turnover was NZ$70.4 million.

Telecom (NZX: TEL ), the biggest company on the index, fell 1.2$ to $2.58, after a new rival, 2degrees, announced it will become the nation’s third mobile phone operator. Fletcher Building (NZX: FBU ), the third largest, fell 1.5% to $6.75.

The decline follows weaker shares on Wall Street on concern prices had been driven too high as investors clung to any signs of recovery. The Standard & Poor’s 500 fell 2.2%. In Asia today, Singapore’s Straits Times Index fell 1.1% to 2141.79 and Japan’s Nikkei 225 declined 1.6% to 9298.61. In Sydney, the S&P/ASX 200 Index fell 1.2% to 3877.20.

A Bloomberg survey showed economists have pared back their forecasts for a recovery from the U.S. recession, with the jobless rate holding above 8% through 2011, while economic growth revives to 1.9% next year.

“The market has run primarily on the basis of people not wanting to miss the opportunity to buy stocks when they are intrinsically cheap,” said Angus Gluskie, who manages about US$250 million at White Funds Management in Sydney. “The falls are a one in 30 or 40-year event. Against that, the economic fundamentals have not changed dramatically – they’re poor at the moment and continue to deteriorate.”

NZ Farming Systems Uruguay (NZX: NZS ) fell 6% to 47 cents and was the biggest decliner on the NZX 50 today. Ryman Healthcare (NZX: RYM ) slipped 4.8% to $1.60 and Fisher & Paykel Appliances (NZX: FPA ) declined 4.5% to 64 cents.

Tourism Holdings (NZX: THL ) fell 3.7% to 52 cents after Air New Zealand, the national carrier, said long-haul passenger volumes extended their slump into April led by an 18% decline in numbers on routes through Asia, Japan and the UK, a sign that tourists are staying away in the midst of a global slump.

Air New Zealand (NZX: AIR ) was unchanged at $1.09. The airline has been reducing capacity to match falling demand and yesterday said it is reviewing regional routes in New Zealand. The company also said there have been a number of cancellations on Japanese routes due to fears of a swine flu pandemic, though there wasn’t likely to be much financial impact on the airline.

Rakon (NZX: RAK ), which makes components for navigation systems, fell 3.7% to $1.57 and Cavalier (NZX: CAV ) dropped 3.8% to $1.78.

Fishing company Sanford (NZX: SAN ) fell 1.7% to $5.65 as the kiwi dollar held above 60 U.S. cents, having surged more than 3 U.S. cents since late April. A higher kiwi trims the value of export revenue.

Pike River Coal (NZX: PRC ) climbed 1.9% to $1.08 after yesterday responded to an ASX query on the recent surge in its stock price by pointing to two recent broker analyst reports which have” re-rated the company’s share price outlook, and positive news reports relating to the steel industries in China and India.”

The shares are up 38% in the past month. Fisher & Paykel Healthcare (NZX: FPH ) climbed 1.9% to $3.20 and is up 7.7% in the past month.

Businesswire.co.nz

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