Market close: NZ shares fall, Fletcher Building tracks 3-year low

Friday 24th October 2008

New Zealand stocks fell, with the NZX 50 Index ending the week about 1% lower, as optimism about global government bailouts for the financial system morphs into gloom about the economic outlook.

The benchmark index fell 1% to 2778.546 today, eroding its gains earlier this week. Stocks tipped as potential gainers were among the biggest decliners. Fisher & Paykel Healthcare, Fletcher Building Ltd. and Guinness Peat Group dropped.

Fletcher, which owns the Formica brand, slid toward its lowest level in three years.

Among signs the credit crisis is continuing to bite, GE Money is withdrawing from home lending, car finance and small business loans in New Zealand, laying off 80 staff.

The U.S. is lurching toward recession, the U.K. may already be there and even China’s dynamo of growth is slowing. Prepare for a period of earnings downgrades, say strategists at UBS AG.
“As the macro backdrop deteriorates the risk to earnings only intensifies,” UBS strategists Jeffrey Palma, William Darwin and Jennifer Delaney said in an Oct. 23 report. “Estimates for 2009 still appear far too high. We expect the pace and magnitude of downgrades to accelerate, creating a headwind for equities.”

Fletcher fell 3.3% to NZ$5.80. Of 11 analysts who rate the stock, seven call it a “buy” and three have an “outperform” on the stock. No-one recommends selling the stock, according to Reuters.

Property investors also fell. AMP Office Trust, Kiwi Income Property Trust, Property for Industry, ING Property and Goodman Property were among decliners on the NZX 50.

NZ Farming Systems Uruguay posted the biggest drop on the benchmark index, falling 8% to NZ$1. Xero Ltd. fell 5% after the online accounting company posted a forst-half loss of NZ$3.47 million and separately announced a tie-up with Telecom Corp., making its services available via Telecom's Business Hub.

Telecom rose 2.2% to NZ$2.31 and has climbed from a record low NZ$2.22 this week.

Contact Energy Ltd., the biggest utility on the index, fell 2.4% to NZ$6.85, a day after shareholders voted on increasing the pool of their fees, with help of majority owner Origin Energy.

The fee hike, which existing directors won’t take up immediately, comes after the electricity and gas company raised fees by 10%, prompting concern it may face a customer backlash.

New Zealand Refining rose 1.7% to NZ$6.10 after the nation’s only refinery said it operated at near to full production in July and August. New Zealand Oil & Gas rose 3.4% to NZ$1.22 as the price of oil rose for a second day. OPEC leaders are meeting to consider cutting production and have already agreed output should fall.

NZX Ltd., operator of the stock exchange, rose 1.9% to NZ$6.04. The company today said third quarter profit rose 23% gain after it curbed operating costs and lifted data sales. Net income in the three months ended September 30 rose to NZ$2.8 million from NZ$2.3 million a year earlier.

(Businesswire.co.nz)

NZ Top 50	2,778.546	-28.793 (-1.03%)
ASX 200	3,869.400	-105.000 (-2.64%)
Dow	8,691.25	+172.04 (+2.02%)
Nasdaq	1,603.91	-11.84 (-0.73%)
FTSE 100	4,087.83	+46.94 (+1.16%)

Last updated: 24/10/2008 5:08pm

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