MARKET CLOSE: NZX 50 follows U.S. lower; Wrightson, Nuplex fall

Monday 30th March 2009

Shares fell, pushing the NZX 50 Index lower for the third day in four as bond sales and rights issues sucked money out of equities. PGG Wrightson led the decline after its chief financial officer resigned.

The NZX 50 fell 11.48, or 0.4%, to 2641.98. Within the index, 26 stocks fell, nine rose and 15 were unchanged. Turnover was a lackluster NZ$44.8 million.

The NZX 50's decline followed a 2% slide in the Standard & Poor's 500 on Friday in New York. In Asia today, Japan's Nikkei 225 fell 2.6% to 8404.73, the Hang Seng slid 3% to 13691.40 in Hong Kong and Australia's S&P/ASX 200 dropped 1.9% to 3602.40.

Insurer AMP is among corporate taking in funds this week, with its offer of A$300 million of Australian and New Zealand dollar dual-currency notes closing on April 2. Nuplex is seeking about NZ$130 million through a rights issue, with shareholders likely to take up the offer to avoid the value of their holdings being decimated.

"There's so much money being taken out of the system," said Alan Moore, who helps manage NZ$250 million at Milford Asset Management. Some investors are standing back from the market with the end of the quarter looming, and weaker stocks in the U.S. gave investors little incentive to buy the New Zealand market, Moore said.

Wrightson dropped 9.1% to $1.10 after the rural services company said CFO Mike Sang resigned after about five years in the role. He will leave upon completion of the 2010 budgeting process, having played a key role in the renegotiation of Wrightson's banking facilities.

Nuplex sank about 9% to 81 cents. Shareholders are being offered the right to subscribe for seven new shares at 23 cents apiece for each existing share held. The specialty chemicals manufacturer was forced to increase its capital raising and lower the price to win support from institutions after breaching the terms of its loan facilities as a weak kiwi dollar drove up the value of overseas debt.

AMP climbed 0.7% to $5.87. Its notes will pay 4.75% over benchmark rates. Auckland International Airport rose 0.6% to $1.71 after chief executive Simon Moutter led an investor briefing about the company's strategy today.

The global downturn is reducing demand for travel and airlines are under severe financial pressure, the company said. The airport can't rely on the relentless passenger growth it has enjoyed in the past and the time to market recovery is "highly uncertain."

The airport's "numbers are down and how long are they going to be down for?" Moore said. The stock has slipped about 4% in the past month and "the stock is not particularly cheap, trading on a high P/E." Auckland Airport is trading at 28 times historical per-share earnings.

Still, the airport is a "solid medium-term stock."

Mining company Pike River Coal rose 4.7% to 90 cents, leading gainers on the index today. Tapmaker Methven Ltd. climbed 4.4% to 1.20 and carpet-maker Cavalier Corp. rose 4.1% to $1.80.

Fletcher Building, the nation's biggest construction company, rose 0.8% to $6.45, lifting its gain in the past month to more than 17%. New Zealand home-building approvals rose for the first time in three months, driven by apartment consents as declining short-term mortgage rates help lure investors back into the property market. Building approvals rose about 12%, seasonally adjusted, in February, climbing from a record low in January, according to Statistics New Zealand.

Businesswire.co.nz

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