MARKET CLOSE: NZ stocks slip; Infratil, NZOG, Pumpkin Patch fall

Monday 18th May 2009

New Zealand shares fell, with the NZX 50 Index dropping for the fifth day in six, joining a sell-off across Asia amid concern the global economy will take longer to revive, leaving companies in a prolonged period of weaker earnings.

The NZX 50 dropped 13.04, or 0.5%, to 2777.85. Within the index, 19 stocks fell, 17 rose and 14 were unchanged. Turnover was NZ$95.4 million.

Children’s clothing chain Pumpkin Patch dropped 6.2% to NZ$1.21, leading the index lower. Ryman Healthcare slipped 4.9% to NZ$1.57.

Infratil Ltd., whose investments include a controlling stake in Trustpower, bus services in Auckland and Wellington, and Wellington’s airport, fell 4% to NZ$1.63 after posting a net loss of NZ$191 million. The loss reflected writedowns of listed investments and earnings before interest, tax, depreciation, amortization and revaluations rose 13%.

“The last year witnessed an extraordinary test of the global financial markets and the companies functioning within it, chief executive Marko Bogoievski said. “Infratil did not deliver on its primary goal of providing its shareholders with superior risk-adjusted returns.”

Stocks fell across Asia today as companies including Panasonic Corp., Mizuho Financial Group and Aozora Bank flagged or posted losses. Japan’s Nikkei 225 Index dropped 2.4% to 9038.69 in late trading. Australia’s S&P/ASX 200 Index fell 1% to 3735.60. Woodside Petroleum fell as the price of crude oil dropped. Shares worldwide snapped a two-month rally amid speculation prices had raced ahead of economic recovery.

“Business fundamentals and economic fundamentals are still looking quite weak,” said Mark Peterson, managing director at Direct Broking. “My gut feeling is we’re close to the bottom but for the short-to-medium term it could be a little bit more painful.”

Peterson said Direct Broking is seeing “more balance” between buy and sell orders, which may suggest some investors are taking advantage of market volatility to increase trading.

Among signs that the local economy remains weak, the Bank of New Zealand – Business NZ Performance of Services Index (PSI), released today, showed the nation’s service industry stumbled in April as domestic household spending shrank, and a reduction in international visitors weighed on the local economy.

The index slipped to 43.7 last month from 47.1 in March. It was the second lowest result since a record low in January of 42.7. Activity/sales sank to 40.9, its second-lowest value, while employment dropped to 42.5 in its second-worst result.

New Zealand Oil & Gas fell 2% to NZ$1.44 after crude oil fell. Crude for June delivery fell 3.9% to US$56.34 a barrel on May 15, the biggest decline in about four weeks. It traded at US$56.63 today.

Transport related companies gained. Mainfreight climbed 0.4% to NZ$4.77 and Freightways jumped 3.1% to NZ$3.04.

Government figures today showed prices paid by New Zealand producers fell 2.5% in the first quarter, the biggest decline since record began in 1977, while producer output prices fell by a record 1.4%. Costs in the air transport industry had the biggest decline in more than 11 years.

Air New Zealand rose 0.9% to NZ$1.07.

The smaller decline in output prices suggests an improvement in margins for producers, said Robin Clements, chief economist at UBS New Zealand.

“Given the pressures that margins and profits have been under because of falling demand, some relief is timely,” he said. “Anything that suggests the business sector is getting some assistance from lower costs improving margins and profits is a positive development.”

Foodmaker Goodman Fielder rose 3.2% to NZ$1.62 and New Zealand Refining gained 1.5% to NZ$6.70. Carpet maker Cavalier Corp. gained 0.6% to NZ$1.79.

NZ Farming Systems Uruguay led the index higher, rising 6.4% to 50 cents.

Businesswire.co.nz

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