MARKET CLOSE: NZX 50 falls with Wall St; Michael Hill, NPX drop

Tuesday 31st March 2009

Shares fell, driving the NZX 50 Index to its biggest decline this month after the Obama administration gave automakers one last chance to restructure, while forcing General Motors CEO Rick Wagoner to resign.

The NZX 50 fell 51.59, or about 2%, to 2590.39. Within the index 29 stocks fell, 15 rose, and six were unchanged.

Turnover was a better-than-average NZ$105.8 million as some investors adjusted their portfolios heading into the end of the first quarter. The benchmark index's slide followed a 3.3% drop in the Dow Jones Industrial Average yesterday in New York. In Asia today, Japan's Nikkei 225 was little changed at 8243.80 and Australia's S&P/ASX 200 fell 0.3% to 3592.20.

U.S. 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, jeweler Michael Hill International slumped 12% to 45 cents, leading declines in companies that make sales in North America and Europe. Nuplex Holdings fell 7.4% to 75 cents, Pumpkin Patch Ltd. slid 4.6% to $1.03, and Rakon dropped 6.9% to $1.21.

"Obviously the U.S. news is pretty staggering, when you hear in the U.S. 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 NZ$250 million worth of assets for Milford Asset Management.

Fletcher Building, which owns the U.S.-based Formica laminated panels business, fell about 7% to $6.

APN News & Media tumbled 17% to $1.39 in light volume on the NZX after fell 5.3% after the newspaper publisher said the outlook remains tough. Some 47,000 shares changed hands. The stock fell 7% to A$1.14 on the ASX, with 369,000 shares traded.

Pike River Coal reversed an earlier decline to be 3.8% high at 90 cents on the day, the biggest gainer on the index. The shares earlier fell 7.7% amid signs that steelmakers are succeeding in driving down prices in coking coal contract negotiations.

Contact Energy, the largest listed power company, fell 2.4% to $5.72 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 13% to 42 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, fell 1.7% to $2.28 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 NZ$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.

by Paul McBeth, Businesswire.co.nz

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