NZX CLOSE: Shares fall; PGW dips as shareholder seeks cash

Monday 31st August 2009

New Zealand shares declined on the final day of the month after PGG Wrightson Ltd.’s biggest shareholder said it may need to raise cash and after Reserve Bank Governor Alan Bollard said the economy faces a “fragile” recovery.

The NZX 50 Index fell 11.33, or 0.4%, to 3098 and declined 2.7% in August. Within the index, 20 stocks fell, 20 rose and 10 were unchanged. Turnover was $87.6 million.

PGG Wrightson (NZX: PGW ) fell 4.1% to 70 cents, the lowest close in six months. Rural Portfolio Investments, the private investment vehicle of Craig Norgate and Baird McConnon, today said it may be forced to increase borrowing or sell assets to fund its cash requirements after 27%-owned Wrightson posted a full-year loss and omitted its final dividend. Wrightson said it may sell assets or raise equity.

“Those with more debt got hit hardest,” said Stephen Wright, private client adviser at ASB Securities. The prospects of a looming cash issue are also weighing on the stock, he said.

Bollard told Radio New Zealand that New Zealand’s recovery is still fragile and could be derailed by volatile world markets.

The biggest stocks on the index retreated today.

Telecom Corp (NZX: TEL ) declined 1.4% to $2.75 after the Commerce Commission began an investigation into an alleged breach of Telecom's Separation Undertakings. The probe follows findings from the Independent Oversight Group which acts as a watchdog on the phone company's commitments to competition, signed with the Crown in 2008.

Fletcher Building (NZX: FBU ) fell 2% to $7.86 and Contact Energy (NZX: CEN ) declined 2.3% to $6.25.

Steel & Tube Holdings (NZX: STU ), which sells steel building supplies, climbed 6.1% to $3.50. The NBNZ survey showed residential construction soared to a 15-year high, with a net 48% picking better times ahead.

Australia & New Zealand Banking Group (NZX: ANZ ) gained 5.2% to $26.30. Australia’s fourth-biggest bank today said profit in the 10 months ended in July was “slightly above” the same period a year earlier on lending growth and lower-than-expected bad debts.

Westpac Banking Corp (NZX: WBC ) rose 0.6% to $30.17 on the NZX.

APN News & Media (NZX: APN ) jumped 6.8% to $2.35 on the NZX, leading the NZX 50 Index higher.

Guinness Peat Group (NZX: GPG ) rose 5% to 84 cents after announcing its first-half loss narrowed. GPG posted a 22 million pound loss, reflecting its unprofitable biggest investment, the Coats threadmaker, from a year-earlier 42 million pounds. ASB’s Wright said the stock gain may reflect the “quite dramatic” reduction in debt at Coats. The company today said net debt fell US$100 million to US$333.9 million by the end of June from a year earlier.

Businesswire.co.nz

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