MARKET CLOSE: NZ shares slip as recovery questioned; Fletcher drops

Wednesday 17th June 2009

New Zealand shares fell for a second day, led by Fletcher Building and Air New Zealand, amid concern a global economic recovery will be slower and weaker than market prices had been indicating.

The NZX 50 Index fell 8.11, or 0.3% to 2778.03. Within the index, 23 stocks fell, 19 rose and eight were unchanged. Turnover was $97.8 million.

Shares were mainly lower across Asia, with the MSCI Asia Pacific Index sliding 1.5% to 102.02, following declines on Wall Street. U.S. President Barack Obama warned that American unemployment could reach 10%, adding to concern about the state of the world’s biggest economy that was stoked by weaker New York manufacturing data.

Resource companies including BHP Billiton, down 2.2% on the ASX, fell as commodity prices weakened. The Reuters-Jefferies CRB index of 19 commodity futures slipped 0.2% to 255.85 and has dropped 4% since reaching a seven-month high last week.

“With weak unemployment and those kinds of indicators you don’t get the feeling we’re all fixed,” said Craig Brown, a fund manager at ING New Zealand. “Commodity prices come down to demand out of China, which is pretty reliant in exports to the U.S.”

Fletcher Building (NZX: FBU ), the nation’s largest construction company, fell 3.6% to $6.36 amid concern signs of stabilization in the housing market here and in Australia won’t be enough to revive earnings. The shares are 13% over-valued, according to the ValueCruncher website, which uses a discounted cash-flow valuation.

Air New Zealand (NZX: AIR ) fell 3% to 98 cents, the first time since mid-April it has slipped below $1. The carrier today said long-haul passenger volumes continued to slide in May, led by a 19% decline in numbers on routes through Asia, Japan and the UK, reflecting the global economic slump and fears about swine flu.

Tourism Holdings (NZX: THL ), the campervan rental company that depends on tourists for revenue, fell 2% to 45 cents and has dropped 30% this year.

Australia & New Zealand Banking Group (NZX: ANZ ) fell 3% to $20.67, following declines in Australian lenders on the ASX.

Stock market operator NZX (NZX: NZX )., which was knocked back in its efforts to acquire Australian exchange NSX Ltd., fell 2.5% to NZ$7.55.NZX today said it was withdrawing its offer to buy a 50.1% of NSX because of a lack of support from the target’s shareholders.

Reserve Bank Governor Alan Bollard today said economic activity in New Zealand is “near its low point,” while the global economy appeared more stable and trading-partner growth forecasts had stopped falling. Fiscal and monetary policy has also stimulated the New Zealand economy, he said. Still, he doesn’t expect a robust rebound.

“We expect the economy to begin growing again toward the end of the year, but the recovery is likely to be slow and drawn out,” Bollard told a business meeting in Wellington, according to a statement from the bank. “It could also be erratic. To many households it may not feel like a recovery at all, with lower employment, house prices and wage increases into next year.”

Specialty chemicals maker Nuplex Industries (NZX: NPX ), which sold shares at a discount to strengthen its balance sheet, fell 2.4% to 41 cents. PGG Wrightson (NZX: PGW ), New Zealand’s biggest rural services company, fell 2.3% to $1.27. Tapmaker Methven (NZX: MVN ) declined 2.2% to NZ$1.35.

Charlie’s Group (NZX: CHA ) fell 4.4% to 11 cents after the unprofitable juice maker said it had rejected ‘low-ball’ offers from multi-national rivals and is mulling opportunities to raise capital and reduce debt as it aims to turn profitable in 2010.

“Our share price is at the lowest of all lows,” chief executive Stefan Lepionka told BusinessWire. “We’re seen as a target at that point,” he said. “We do have something of value and they (the multinationals) know that.”

Businesswire.co.nz

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