MARKET UPDATE: NZX 50 follows global decline; Nuplex slides

By Paul McBeth

Tuesday 31st March 2009

New Zealand shares fell, driving the NZX 50 Index lower for a second straight day as the Obama administration gave automakers one last chance to restructure, while forcing General Motors CEO Rick Wagoner to resign.

The NZX 50 fell 29.226, or 1.1%, to 2612.762. Within in the index 29 stocks fell, 8 rose, and 13 were unchanged. The NZX 50's decline followed a 3.3% slide in the Dow Jones Industrial Average yesterday in New York. In Asia today, Japan's Nikkei 225 gained 1.5% to 8359.47, and Australia's S&P/ASX 200 sank 0.6% to 3652.8.

US President Barack Obama told ailing automakers GM and Chrysler LLC they have one last chance to "fundamentally restructure" or face bankruptcy. GM tumbled 25%, while concern banks may need more cash drove down financial stocks such as Bank of America.

On the NZX 50, Nuplex Holdings fell 6.2% to 76 cents, leading declines in companies that make sales in North America and Europe. Fisher & Paykel Appliances Holdings fell 4% to 48 cents, Pumpkin Patch decreased 5.6% to $1.02, and Rakon dropped 4.6% to $1.24.

"Obviously the US news is pretty staggering, when you hear in the US GM's CEO has been given the boot by the President, it sounds more like science fiction," said Alan Moore, who helps manage the equivalent of $250 million worth of assets for Milford Asset Management.

Fletcher Building, which owns the US-based Formica laminated panels business, fell 3.9% to $6.20.

Pike River Coal declined 7.7% to 80 cents amid signs that steelmakers are succeeding in driving down prices in coking coal contract negotiations. Japan's Nippon Steel signed a contract with BHP Billiton at US$128-129 per metric ton, 57% lower than a year ago.

Pike River has "a lot of coal on firm contracts, but they need to start producing," Moore said.

Production at the Pike mine was delayed by about three months for repair work to a ventilation shaft.

Contact Energy, the largest listed power company, fell 1% to $5.80 after announcing it had bought back 2.6 million of 11.3 million bonus shares issued under the company's profit distribution plan, keeping $49.1 million in the business. The power company's majority shareholder Origin Energy increased its stake in Contact by 0.06% through the share issue.

Tourism Holdings sank 2.1% to 47 cents after announcing it had renewed its bank funding arrangements in line with expectations, with a working capital facility expiring in April 2011, and a term facility expiring in October of the same year.

Telecom, the largest listed company in New Zealand, rose 0.4% to $2.33 after the government called for submissions on a plan to form a state-owned company that will invest alongside the private sector in rolling out high-speed broadband. The government will put up $1.5 billion over 10 years and expects private investors to match that contribution.

Chief executive Paul Reynolds said Telecom supports the government's vision, and will spend $1.3 billion this year in improving the country's telecommunications structure.

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