MARKET CLOSE: NZ shares slide; Pike, Fletcher, Rakon fall

Tuesday 23rd June 2009

New Zealand shares fell, joining a worldwide slide, after a downbeat global assessment from the World Bank and signs of a deeper slump at home weighed on construction firm Fletcher Building, miner Pike River Coal and New Zealand Oil & Gas.

The NZX 50 Index fell 32.91, or 1.2%, to 2762.01. Within the index, 38 stocks fell, nine rose and three were unchanged. Turnover was a lower-than-average $55.9 million.

The NZX 50 fared better than benchmarks across Asia, with Telecom Corp. (NZX: TEL ), the biggest company on the index, falling just 0.4% to $2.62, reflecting its XT network rollout and lack of commodity exposure.

Fletcher (NZX: FBU ) declined 3.2% to $6.41 as a survey from the New Zealand Institute of Economic Research showed economists are predicting the economy will shrink 1.6% in the year to March, by which time the unemployment rate may have reached 7.2%, with 60,000 jobs lost.

Pike River Coal (NZX: PRC ), which is preparing to start production at its South Island mine, fell 4.4% to $1.10 as falling commodity prices depressed resource stocks.

New Zealand Oil & Gas (NZX: NZO ) slipped 3.3% to $1.53 as crude oil extended its slide below US$70 a barrel, reaching US$66.89.

Stocks fell across Asia, with Japan’s Nikkei 225 down 2.9% in early afternoon trading and Hong Kong’s Hang Seng falling 3.2% after the World Bank predicted a harsher global recession this year than it was forecasting three months ago.

In Sydney, the S&P/ASX 200 declined 3.1%, with Rio Tinto slumping 2.78% to A$48.61, leading a slide in commodity producers. “It’s another reminder we’re not out of the woods yet,” said Paul Robertshawe, head of equities at Tower Asset Management.

Telecom “is cheap on multiples, hasn’t got commodity exposure and has it own drivers with the XT network,” he said. Telecom is trading at about 9.5 times earnings, while Australian rival Telstra Corp. is trading at 11.4 times.

Rakon Ltd (NZX: RAK ), the maker of components for navigation systems, fell 4.5% to $1.48 after director Peter Maire announced plans to sell more of his holding to fund other investments. Maire will sell 700,000 of the 11.4 million shares he holds, the company said, worth $1.04 million at today’s price.

Jeweller Michael Hill International (NZX: MHI ) fell 4.4% to 66 cents and manufacturer Skellerup Holdings (NZX: SKL ) fell 3.5% to 56 cents.

Australia & New Zealand Banking Group (NZX: ANZ ) fell 3% to $20.05 and Westpac Banking Corp. (NZX: WBC ) fell 3.2% to $24.20 on the NZX, following declines in lenders on the ASX after Moody’s Investors Service released a survey of banks across Asia, and said the outlook for the industry in Australia and New Zealand is negative.

“The banks are OK but their valuations are stretched” after recent gains, Robertshawe said.

Auckland International Airport (NZX: AIA ) rose 2.6% to $1.60, the biggest gainer on the NZX 50 today.

NZ Farming Systems Uruguay (NZX: NZS ) climbed 2.2% to 47 cents and Tourism Holdings (NZX: THL ) shed 2.2% to 47 cents.

Businesswire.co.nz

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