Market close: Stocks slide amid global rout; Michael Hill falls

Friday 10th October 2008

New Zealand stocks extended their decline, pushing the benchmark NZX 50 Index to a four-year low, amid concern the global rout will lead to a worldwide recession and more corporate failures.

The NZX 50 fell 134.945, or 4.6%, to 2809.45 at the 5 p.m. close of trading in Wellington. Twenty nine stocks fell more than 5%. ANZ Banking Group, Pike River Coal and Lion Nathan tumbled more than 10%. The index’s slide was less than some of Asia’s major benchmarks. The Nikkei 225 Index fell 11% and the MSCI Asia Pacific Index, which tracks major shares across the region, dropped 6.5%. Australia’s S&P/ASX 200 Index fell more than 7%.

“The fundamental pricing model has completely broken down,” said Craig Brown, fund manager at ING New Zealand in Auckland. “At the moment you have got to make the call if you want to catch the falling knife or say there are some bargains here.”

Jewelry chain Michael Hill International fell 8% to 68 cents after predicting tough times in Australia and New Zealand. ANZ Banking dropped 10% to NZ$17.27 and Westpac Banking dropped 9.8% to NZ$24.60, tracking the slide in Australian financial stocks.

Pike River fell 11% to NZ$1.26 after Goldman Sachs JBWere Pty cut its forecasts for iron ore and coal, because of the deteriorating global economy. The firm said coking and thermal coal prices probably won’t rise in 2009, having previously predicted gains of 10% for coking coal, the type Pike River will produce from its mine.

Tourism Holdings fell 4,2% to NZ$1.15 after government figures showed little change in accommodation demand in August as a weak kiwi dollar kept Australians visiting. The kiwi has since strengthened against the Australian dollar.

ING’s Brown said he agrees with AMP Capital’s Guy Elliffe that prices are now nearer to the bottom of their cycle.

“Yes things got tougher – but that tough?” he said. “Valuations all come down to underlying earnings. At the moment it is pretty hard to get a handle on what the outlook is.”

He cited Contact Energy as a company that should weather the crisis better than most. The utility fell 1.4% to NZ$7.20 and has fallen 10% this year, less than half the benchmark index’s decline.

(Businesswire.co.nz)

NZ Top 50	2,805.314	-139.081 (-4.72%)
ASX 200	3,960.700	-360.200 (-8.34%)
Dow	8,579.19	-678.91 (-7.33%)
Nasdaq	1,645.12	-95.21 (-5.47%)
FTSE 100	4,313.80	-52.89 (-1.21%)

Last updated: 10/10/2008 5:09pm

AIA	1.70	-0.07
AIR	0.90	-0.03
AMP	6.90	-0.44
ANZ	17.27	-1.93
APN	3.65	0.00
APT	1.07	-0.03
CAV	2.35	0.00
CEN	7.20	-0.10
EBO	4.10	-0.29
FBU	5.86	-0.53
FPA	1.35	-0.14
FPH	2.96	-0.04
FRE	2.90	-0.14
GFF	1.60	-0.12
GMT	1.07	-0.07
GPG	0.99	-0.05
HLG	2.45	-0.05
IFT	1.89	-0.10
IMP	1.08	-0.05
ING	0.60	-0.05
KIP	1.16	-0.03
LNN	9.40	-1.20
MFT	5.30	-0.45
MHI	0.68	-0.06
MVN	1.25	-0.08
NPX	5.00	-0.53
NZO	1.16	-0.04
NZR	5.75	-0.35
NZS	1.15	-0.03
NZX	5.83	-0.33
PFI	1.09	0.00
PGW	1.65	-0.10
POT	6.18	-0.10
PPL	1.10	-0.09
PRC	1.26	-0.15
RAK	2.05	-0.13
RYM	1.40	-0.14
SAN	5.29	-0.13
SKC	2.93	-0.19
SKL	0.87	-0.05
SKT	3.90	-0.25
STU	3.60	-0.08
TEL	2.56	-0.09
THL	1.15	-0.05
TLS	4.46	-0.36
TPW	7.00	-0.40
TWR	1.45	-0.08
VCT	2.08	-0.07
WBC	22.20	-2.40
WHS	3.40	-0.09

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