MARKET CLOSE: NZ shares slip; MHI, Methven, Pyne Gould decline

Thursday 24th September 2009

New Zealand shares fell for the third day in four amid speculation the six-month rally in the NZX 50 Index means prices already reflect the emerging signs of economic recovery.

The NZX 50 fell 17.48, or 0.6%, to 3130.41. Within the index, 30 stocks fell, 15 rose and five were unchanged. Turnover was $105 million.The benchmark index has climbed 31% from its lows in March, as stock markets globally rode ahead of any tangible signs of economic recovery.

The index had reached an 11-month high last week. Foodmaker Goodman Fielder fell 4% to $1.90, leading the index lower. Jeweller Michael Hill International slipped 4% to 72 cents. Fletcher Building, the nation’s biggest construction company, fell 2% to $8.31, declining from a 16-month high.

“We’re very conscious of the fact that some stocks have doubled from the bottom,” said Paul Robertshawe, who manages $250 million at Tower Asset Management. Unlike in March, when many stocks offered value, “you’ve got to be a bit more selective now,” he said.

Methven Ltd., the tap and bathware maker, fell 2.9% to $1.65. The manufacturer is among companies that derive revenue from overseas markets which is eroded by a high kiwi dollar. The currency last traded at 72.13 U.S. cents and is trading near a 13-month high.

Fisher & Paykel Appliances fell 1.3% to 74 cents and Sanford Ltd., the fishing company, fell 1.2% to $4.99.

Pyne Gould Corp. tumbled 18% to 81 cents, a day after the investment and finance group announced plans to raise as much as $270 million selling shares at a 60% discount to restore a balance sheet eroded by write-downs on property loans. The slump reverses a similar-sized gain yesterday.The first part of the capital raising, a renounceable rights issue at 40 cents apiece to raise $237 million, is underwritten by First NZ Capital and director George Kerr.

“It’s a company that could be interesting but there are quite a few risk factors,” Robertshawe said. The valuation “is OK but it looks quite volatile.” Tower will be assessing the prospects during the trading of rights before making a final decision, he said.

Hallenstein Glasson Holdings climbed 3.7% to $3.05 after the clothing chain posted a 19% drop in annual profit to $12.8 million, better than its initial assessment of the results last month. Hallenstein lifted earnings by 10% in the second half, mainly reflecting an improved performance in Australia from its Glassons women’s clothing chain.

Skellerup Holdings rose 7.3% to 59 cents. The company’s underwritten rights issue for $21.5 million rights issue will resolve its debt issues, says Forsyth Barr analyst John Cairns, according to the ShareChat website. Cairns reduced his valuation on the stock to 74 cents from 82 cents to reflect the two-for-five issue.

Businesswire.co.nz

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