Market close: NZ stocks temper slide, NZX 50 ends down 1.5%

Monday 6th October 2008

The benchmark NZX 50 Index fell 1.5% amid prospects for dwindling earnings and an ongoing global rout. Goodman Fielder and Pumpkin Patch led the decline.

The NZX 50 fell 44.186 to 3004.191, having dipped below that level in intraday trading for the first time since 2005. The index pared its gain after the Reserve Bank of Australia cut its target rate 100 basis points to 6%, twice the expected pace.

NZ Farm Systems Uruguay rose 4.4% to NZ$1.20 and Michael Hill International gained 2.8% to 74 cents.

The steep rate cut may prevent an economic slump in New Zealand’s biggest export market and stoked speculation it may herald a bigger cut by the RBNZ.

The central bank “has already shown that it is breaking out of its previous mould and delivering a similar move would not be surprising,” said Shamubeel Eaqub, director of Australia & New Zealand investment research at Goldman Sachs JBWere.

Guinness Peat Group fell a second day after its Coats threadmaking unit lost an appeal against cartel fines. Pike River Coal fell on the prospects of weaker demand for the fuel.

The sell-off has slashed at least US$2.5 trillion from the value of global equities, according to a Bloomberg estimate. In the US, the Dow Jones Industrial Average fell below 10,000 for the first time in four years.

“The fear factor for people is stemming back investments,” said Alan Moore, a fund manager who helps manage $260 million of kiwi stocks for Milford Asset Management.

ANZ Bank shares recovered on the NZX, ending the day up 0.2% to NZ$21 after the RBA cut rates. The shares had been down 3% earlier.

Moore said banking in Australasia is in “pretty good shape” and will probably perform better than in nations where the credit crisis is biting hardest, such as the US.

Bargain hunters are waiting to see if prices fall further, said Moore, because the “yields are attractive.” New Zealand companies are in a “relatively good condition,” he said. “The big question is whether the dividends are sustainable.”

Moore said the weakening New Zealand dollar will help underpin exporters. The currency fell as low as 61.70 US cents. Fisher & Paykel Healthcare Corp. which makes most of its sales in U.S. dollars, rose 2.4% to NZ$3.02.

“The New Zealand and Australian economies are in reasonably good shape in the global situation,” Moore said. He predicts the New Zealand market will not crash as badly as it did in 1987.

The top ranked share Telecom dropped 0.36%, while the second ranked Contact Energy was up .68%. Fletcher Building, the third best stock, fell 1.23%.

The retail sector was mixed, The Warehouse Group closed up 1.31%, Hallensteins Glasson dropped 1.16% and Pumpkin Patch plunged 5.47%.

Today's gainers were Postie Plus Group up 15%, Austral Pacific Energy up 5%, and Windflow Technology up 4.9%.

Declines were seen from Glass Earth Gold dropped 20%, Botry-Zen lost 16%, Pan Pacific Petroleum down 12.50%, L & M Petroleum down 10%, OceanaGold Corporation droppped 9.30%.

Scott Technology, which supplies manufacturing equipment for whiteware manufacturers and meat companies, posted a full-year loss on a downturn in the US and the impact of drought on slaughterhouses at home. Shares closed down 1.57%.

NZ Top 50	3,004.191	-44.186 (-1.45%)
ASX 200	4,618.700	+78.300 (+1.72%)
Dow	9,955.50	-369.88 (-3.58%)
Nasdaq	1,862.96	-84.43 (-4.34%)
FTSE 100	4,589.19	-281.15 (-5.77%)

AIA	1.80	-0.10
AIR	0.94	-0.02
AMP	7.79	+0.04
ANZ	21.00	+0.05
APN	3.65	0.00
APT	1.11	-0.02
CAV	2.45	-0.05
CEN	7.45	+0.05
EBO	4.30	-0.02
FBU	6.42	-0.08
FPA	1.57	-0.07
FPH	3.02	+0.07
FRE	3.05	-0.12
GFF	1.60	-0.10
GMT	1.17	-0.01
GPG	1.09	-0.06
HLG	2.55	-0.03
IFT	2.00	0.00
IMP	1.12	-0.01
ING	0.66	-0.03
KIP	1.18	-0.04
LNN	10.40	-0.20
MFT	6.05	-0.11
MHI	0.74	+0.02
MVN	1.38	+0.03
NPX	5.70	-0.15
NZO	1.23	-0.05
NZR	6.25	-0.15
NZS	1.20	+0.05
NZX	6.18	-0.15
PFI	1.11	-0.03
PGW	1.75	-0.01
POT	6.60	-0.10
PPL	1.21	-0.07
PRC	1.55	-0.07
RAK	2.25	-0.08
RYM	1.54	-0.04
SAN	5.45	0.00
SKC	3.25	-0.08
SKL	0.90	0.00
SKT	4.18	-0.02
STU	3.72	+0.01
TEL	2.78	-0.01
THL	1.22	-0.03
TLS	4.85	-0.20
TPW	7.49	-0.31
TWR	1.66	-0.07
VCT	2.11	-0.05
WBC	25.75	-0.25
WHS	3.10	+0.04

By Jonathan Underhill

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