MARKET CLOSE: NZX 50 falls; Nuplex leads

Friday 20th March 2009

New Zealand shares fell, snapping a five-day rally, after Nuplex Industries was forced to make a rights offer at a deep discount and doubts swirled about the wisdom of the Federal Reserve's decision to print more money.

The NZX 50 Index fell 34.183, or 1.3%, to 2599.026, the first decline since March 12. Within the index, 29 shares fell, 12 rose and nine were unchanged. Turnover was $85.5 million.

Nuplex sank 52% to 51 cents. Shareholders will be offered the right to buy seven new shares for every one held at 23 cents apiece, raising NZ$132.8 million to repay debt after the company breached its loan covenants. It had initially sought to raise $110 million.

Shares fell on Wall Street overnight, led by banks, amid concern the Fed has limited scope to lift the U.S. economy by printing dollars. It plans to buy up to US$300 million of Treasury bonds and as much as US$1.45 trillion of mortgage-backed securities. Its announcement sent the U.S. dollar plunging driving up the kiwi dollar, which briefly topped 56 U.S. cents.

"The market is still trying to understand if these stimulatory packages around the globe are going to have any benefit," said Rickey Ward, equities manager at Tyndall Investment Management. "The signs are that people want it to be positive so maybe we're nearing the bottom," he said. Still, "market volumes around the globe are still relatively light."

Fisher & Paykel Appliances has tumbled 69% this year as its performance suffered with a downturn in the housing market in New Zealand and in export markets. It is contemplating a capital raising though Stephen Walker, head of asset management at Goldman Sachs JBWere, said it has property and other assets that can be turned into cash

Nuplex has dropped 52% this year. Fund managers participating as sub-underwriters demanded Nuplex allow the right to top up their holdings after the rights issue. Underwriter First NZ Capital has the right to require Nuplex to make a top-up placement of NZ$22.8 million, or 15% of the shares on issue, at 23 cents apiece for five days following the issue.

APN News & Media, publisher of the New Zealand Herald, was unchanged today at $1.20 and joins Nuplex and FPA as the largest decliners this year, having fallen 61%.

Telecom fell 4.9% to $2.33. A Commerce Commission report on back-haul routes, part of the deal that gives rivals access to Telecom's local loop, suggests competition on some routes hasn't eventuated as expected while some new routes may warrant inspection.

Rakon, which makes components for navigation systems and has access to plants in China, New Zealand and Europe, fell 4.7% to $1.21. Fisher & Paykel Healthcare, regarded as relatively recession proof because it sells breathing aids into a market which has been rising, fell 4.4% to $3.06.

The healthcare company gets 80% of its revenue in U.S. dollars and the kiwi has strengthened the past week, reaching 56 U.S. cents earlier today and trading recently at 55.66 cents. It was at 50.51 cents on March 4.

ProvencoCadmus, the owner of the eftpos system used by Warehouse Group, rose 3.9% to 13.5 cents and has surged 136% in the past week. The company had no explanation in answer to a query from the NZX. The stock is still more than 60% down on its high point in the last year.

Volume today of 861,269 marks this as one of the five heaviest trading days this year, with yesterday also among the top 5.

NZ Farming Systems Uruguay rose 11% to 78 cents and PGG Wrightson gained 1.7% to $1.22. Rural Portfolio Investments, the investment vehicle owned by Wrightson chairman Craig Norgate and the family of Baird McConnon, has made arrangements to fund $42.5 million of preference shares that mature in April. RPI owns a controlling stake in Wrightson, which owns NZ farming Systems and reaps a management fee in profitable times.

In Australia, the S&P/ASX 200 Index fell 0.4% to 3465.8 as bank shares slipped, tracking the decline in financials in the U.S. Centro Retail slumped 43% to 1.6 cents and GPT Group tumbled 33% to 29 cents. Australia & New Zealand Banking Group fell 1.4% to A$14.55 and national Australia Bank slid about 2% to A$19.12.

Businesswire.co.nz

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