NZX CLOSE: NZ shares fall, Pan Pacific, NZ Oil & Gas lead slide

Tuesday 13th October 2009

New Zealand shares fell, led by closely related oil companies Pan Pacific Petroleum and NZ Oil & Gas, after the former said another party in Vietnam at exercised pre-emptive rights over blocks it was hoping to invest in.

The NZX 50 fell 9.42, or 0.3%, to 3169.46. Within the index, 21 stocks fell, 20 rose and nine were unchanged. Turnover was $86 million.

Pan Pacific dropped 11% to 58 cents. In May the company entered into a farmin agreement with Premier Oil Vietnam South for a 15% interest in an offshore block. The deal was subject to waiver of pre-emption rights by PetroVietnam, which has now chosen to exercise the rights.NZ Oil & Gas, which owns 15% of Pan Pacific, declined 4.5% to $1.69.

New Zealand’s benchmark index reached a 12-month high this month, matching the advance of the Standard & Poor’s 500, which has been stoked in anticipation of economic recovery and improved company profits. Intel Corp., Johnson & Johnson, Bank of America, Goldman Sachs Group, JPMorgan Chase, Citigroup, Google and General Electric are among companies reporting earnings this week.

“In the U.S., people are starting to get pretty bullish on third-quarter earnings,” said Keith Poore, head of investment strategy at AXA Global Investors in Wellington, which manages $4 billion. “If you look at economic growth, the extent of the rebound is often in proportion to the depth of recession.”

Poore said stocks aren’t over-valued on a price-to-sales basis, which is a more stable measure of value that price-to-earnings when companies are suffering.

Skellerup Holdings gained 1.8% to 57 cents. Companies associated with director Selwyn Cushing took up shares under their entitlement to the rural services company’s two-for-five rights issue. The rubber goods and milking equipment maker raised $21.54 million from its rights issue to repay bank debt.

Michael Hill International, the jewellery chain that gets three quarters of its revenue in Australia, fell 4% to 69 cents. Margins contracted in Australia and New Zealand as the retailer discounted stock to maintain sales and spent more on promotions, chairman Michael Hill said yesterday.

Pumpkin Patch rose 1.5% to $1.99 after government figures showed retail sales jumped more than twice as much as expected in August, led by a 6.5% increase for clothing and softgoods.

Fisher & Paykel Healthcare fell 1% to $2.98 as the kiwi dollar climbed on the back of the retail sales data. The manufacturer of respirators gets almost 80% of its revenue in U.S. dollars.

F&P Appliances gained 1.5% to 67 cents.

Infratil Ltd. declined 1.2% to $1.62 after the chairman of the Auckland Regional Transport Authority gave the investment company’s NZ Bus unit an ultimatum to resolve a labour dispute and get buses back on the road or risk losing its contract.

AXA Global’s Poore said relatively low interest rates in New Zealand are making equities look “more attractive.”

Reserve Bank Governor Alan Bollard has made a commitment to keep rates at current record-low levels “and you start to lose credibility if you stop doing what you say.”

Businesswire.co.nz

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