MARKET CLOSE: Fletcher leads NZ stocks lower; Nuplex jumps

Wednesday 25th March 2009

Shares fell, with the NZX 50 Index shedding part of yesterday's rally as some investors took advantage of recent gains to sell companies such as Fletcher Building and Methven.

The NZX 50 fell 5.0, or 0.2%, to 2630.32. Within the index, 22 stocks fell, 17 rose and 11 were unchanged. Turnover was NZ$70.4 million.

The decline "is a reaction to such a strong rally yesterday," said Paul Robertshawe, who oversees about NZ$250 million at Tower Asset Management in Wellington. Fletcher "got a bit ahead of itself - I don't see anything unusual there."

Fletcher fell 3.5% to $6.07, having jumped 18% in the past month. The Relative Strength Index for Fletcher held above 80 earlier this week, on a scale where technical analysts view a reading over 70 as meaning a stock is poised to fall.

Stocks fell after Wall Street retreated from its initial rally on the prospects of the Federal Reserve's plan to stoke U.S. economic growth by buying US$300 billion of Treasuries and more than US$1 trillion of toxic mortgage-related assets from banks.

Stocks were mixed across Asia today, the Japan's Nikkei 225 Index falling 0.2% to 8472.38 in early afternoon trading. Government figures showed Japan's exports plunged a record 49.4% last month, with shipments to the U.S. sliding 58%. In Hong Kong, the Hang Seng Index slipped 0.2% to 13886.93.

Australia's S&P/ASX 200 Index rose 1% to 3616.8 as Woodside Petroleum led oil companies higher on a gain in crude oil.

Methven fell 4.2% to $1.15, having climbed 14% in the past month. Steel & Tube Holdings, which sells steel building materials, slipped 3.3% to $2.61.

Government figures on Friday are expected to show the economy shrank 1% in the fourth quarter, worse than the central bank's forecast of a 0.8% contraction. A survey released today showed New Zealanders turned pessimistic in the last three months as rising unemployment, falling property values and a gloomy global backdrop caused people to trim spending and pay debt.

The Westpac McDermott Miller Consumer Confidence Index fell to 96 in the first quarter from 101.3 in the previous three month period. A reading below 100 means pessimists outnumber optimists.

Westpac senior economist Donna Purdue said the drop in confidence was relatively mild compared to consumer sentiment in the U.S. and Australia.

"Confidence has remained remarkably resilient given the sheer volume of negative news consumers have been bombarded with in recent months," Purdue said.

The NZSX Consumer Index rose 1.1% today, as Warehouse Group advanced 0.6% to NZ$3.67 and Hallenstein Glasson Holdings rose 2.2% to $2.38, Pumpkin Patch climbed 2.9% to $1.08.

Telecom rose 1.7% to $2.35. The Commerce Commission today rejected an offer from Telecom and rival Vodafone Group to trim fees mobile companies charge other carriers to terminate calls on their networks.

"Any revised undertakings will need to offer significantly lower mobile termination rates before the Commission could consider recommending that the Minister accept them," said chair Paula Rebstock.

Telecom shares have declined about 40% in the past year. Nine years ago the stock changed hands at about $9.50.

The regulator's statement shows Telecom "has a way to go" in terms of regulation, said Guy Hallwright, an analyst at Forsyth Barr. Telecom has been told "go away and sharpen up" over the mobile termination offer.

Reuters yesterday reported that Asian telecommunications firm Pacnet is interested in acquiring Telecom's AAPT unit though the value of the target is less than it was in December.

Nuplex Industries soared 29% to 88 cents as investors sought the stock to gain entitlement to buy seven more shares at 23 cents apiece - a deal demanded by institutions before they would support the company's capital raising.

The company will raise $132.8 million after funds agreed to underwrite the issue.

"There are enough people prepared to back the company with their money," Tower's Robertshawe said. Nuplex had to raise more than its market value in new stock, resulting in the deep discount and the company is worth more than 23 cents a share, he said.

Fisher & Paykel Appliances, which is also pondering raising equity capital to strengthen its balance sheet, jumped 10% to 43 cents.

The manufacturer today announced it has become the first to participate in the government's nine-day working fortnight scheme, with about 60 jobs to be saved at an Auckland plant after workers agreed to a temporary 35-hour week.

Pike River Coal rose 3.9% to 80 cents. The mining company has started work to restore a ventilation shaft that has delayed production, the New Zealand Press Association reported.

Businesswire.co.nz

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