NZX CLOSE: NZX 50 eases as Fonterra forecast pushes kiwi to 13-month high

Tuesday 22nd September 2009

New Zealand shares fell on the benchmark NZX 50 as the kiwi dollar hit a new 13-month high, dimming the prospect of earnings growth for the country’s exporters.

Despite a bullish Fonterra Cooperative Group forecast pay-out to farmers and a dramatic improvement in the current account deficit to 5.9% of GDP, the NZX 50 fell 12.8, or 0.4%, to 3142.86, the second daily decline in a row.

Within the index, 26 stocks fell, 18 rose, five were unchanged, and one was halted. Turnover was $67.3 million.

The main corporate event for the day involved Rakon Ltd (NZX: RAK ), the maker of components for navigation systems. Rakon was put on a trading halt after it announced a proposed capital raising of $65 million through an underwritten institutional placement and share purchase plan at a 26% discount. The shares last traded at $1.49.

Michael Hill International Ltd (NZX: MHI ), the jewelery maker, slid 2.6% to 74 cents and whiteware manufacturer Fisher & Paykel Appliances Ltd (NZX: FPA ) declined 2.6% to 76 cents as the surge in the kiwi dollar eroded the value of their exports.

“Fonterra’s upgraded payout caused a currency spike that flowed through to the market,” said Craig Brown, who helps managed the equivalent of $3.3 billion for ING New Zealand.

Port of Tauranga (NZX: POT ) led the index lower, falling 3% to $6.50 and rural services company PGG Wrightson Ltd (NZX: PGW ) declined 2.8% to 69 cents.

Still, Fonterra’s upgrade forecast underpinned the prospects for New Zealand Farming Systems Uruguay Ltd (NZX: NZS ), the company looking to translate New Zealand’s intensive dairy farming techniques in South America, which surged 7.3% to 44 cents on a light volume of 49,500 shares. The gain probably “reflects improving dairy conditions and improving conditions globally,” Brown said.

Cavalier Corp (NZX: CAV ), the carpet-maker and wool processor, climbed 4.1% to $2.81 amid continuing gains in net migration, which is underpinning a recent surge in the housing market. The company was upgraded to a ‘hold’ by McDouall Stuart this month on the prospect of an upturn in the residential property market.

The national carrier Air New Zealand Ltd (NZX: AIR ) fell 0.8% after it announced it carried 3% fewer passengers last month compared to the same month a year earlier.

The country’s main gateway Auckland International Airport Ltd (NZX: AIA ) slipped 0.5% to $1.91.

Businesswire.co.nz

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