MARKET CLOSE: NZ shares fall; Air NZ down on passenger numbers

Friday 19th June 2009

New Zealand shares fell, ending a three-day gain, as Air New Zealand retreated on concerns over the national carrier’s declining passenger numbers and increased competition. The NZX 50 Index slid on light volumes while Asian equities gained on better-than-expected data out of the U.S.

The NZX 50 fell 13.96, or 0.5%, to 2784.27. Within the index, 21 stocks declined, 20 advanced, and nine were unchanged. Turnover was around $112.9 million, with some 6.1 million shares in Air New Zealand changing hands to push the stock down 4.3% to 90 N.Z. cents.

The airline’s stock fell after it reported a 19% decline in passenger numbers through Asia, Japan and the U.K. earlier this week, amid heightened fears about the impact of the swine flu pandemic on the economy.

The passenger numbers “flowed through, but there are quite a few other factors” weighing on the shares, said Alan Moore, who helps manage the equivalent of $250 million for Milford Asset Management. “There’s more competition on the main trunks” and these combined to drag stock lower today, he said.

Telecom Corp., the largest listed telecommunications company, sank 3% to $2.61 after competitors Orcon Internet Ltd. and Vodafone New Zealand condemned the Commerce Commission’s final determination on the price of unbundling the sub-loop.

“There was a bit of an over-reaction” to the regulator’s ruling and the company’s statement that it secured the role as primary sponsor of the All Blacks, Moore said. The sponsorship deal “should help them sell more cellphones,” but it’s just an announcement at this stage, he said.

PGG Wrightson led the index lower, sliding 9.1% to $1.20, while New Zealand Refinery Company Ltd. dropped 8.5% to NZ$6.82 as the cloud of whether Shell New Zealand will wind down its holding continues to hang over the company.

Tourism Holdings was the biggest gainer, and climbed 6.5% to 49 cents after it successfully batted away accusations by the Shareholders Association yesterday that it was in breach of its banking covenants.

Mainfreight rose 4.7% to $4.45, while Nuplex Industries Ltd. gained 3.1% to $1.66.

The New Zealand dollar gained to 63.91 U.S. cents from 63.38 cents yesterday as investors continued to ignore Reserve Bank Governor Alan Bollard’s warning it would risk an export-led recovery in the economy.

ASB Bank said the high currency would likely weigh on the economy, and predicted the central bank would ease rates further, with two cuts to the official cash rate in September and October. ASB predicts the economy shrank a smaller-than-expected 0.5% in the first three months of this year.

Businesswire.co.nz

Comments from our readers

No comments yet