NZX CLOSE: NZ shares fall; Telecom drifts lower after fine, FBU drops

Monday 7th December 2009

New Zealand shares fell for a second day, with Telecom Corp. sliding to an eight-month low after being fined for misleading advertising, and Fletcher Building drifting lower.

The NZX 50 Index fell 7.87, or 0.3%, to 3138.57. Within the index, 20 stocks fell, 19 rose and 11 were unchanged. Turnover was $69 million.

Telecom fell 2.1% to $2.36, the lowest since early April. The nation’s biggest phone company was fined $500,000 after a Commerce Commission investigation found the company made misleading claims in its 2006 Go Large broadband campaign. That’s its seventh reprimand or fine for breaches of the Fair Trading Act since 2003.

Fletcher declined 1.7% to $7.86.

The biggest stocks on the index have suffered from MSCI-related selling, said Paul Harrison, who oversees about $150 million at BT Funds Management. An MSCI portfolio investor has been offering to sell stocks the past few days and with the market “very skinny at the moment” that’s been enough to drive shares lower.

Harrison said equity markets need more proof of the global economic recovery to drive much higher in this year’s rally. “We’re going to need some kind of stunning evidence of sales growth in the U.S.,” he said.

NZX led gainers on the NZX 50 today, rising 5.2% to $8.31 after the bourse operator announced it would quadruple shares on issue and increase dividends by at least a cent a year.

The prospect of increasing dividends is “implying they can grow their earnings,” Harrison said.

Fisher & Paykel Healthcare climbed 3.7% to $3.41, a three-month high. The shares have rallied about 12% since the manufacturer of breathing masks and respirators posted a record first-half profit on Nov. 19 and predicted a strong second half.

ING Property Trust slipped 2.5% to 77 cents and most other property stocks were unchanged, having gained into the end of last week, when DNZ Property Fund postponed plans to sell shares through an initial public offering.Harrison said DNZ’s move had left some cash looking for a home.

Allied Farmers climbed 3.7% to 28 cents after Mark Hotchin, one of Hanover Finance’s high-profile owners, urged investors to ignore their personal dislike of him and accept the $400 million all-stock deal offered by Allied to get the failed finance firm out of moratorium. Investors in Hanover and affiliate United Finance would end up owning almost 95% of the enlarged Allied after the transaction, which must be approved by both investors and Allied shareholders.

Heritage Gold NZ Ltd climbed 2.2% to 4 cents, extending Friday’s 18% jump after the miner announced it had been granted a 25-year permit to extract gold and silver from the site of the old Talisman mine near Paeroa. The company is in talks with potential Chinese investors about the project.

Among other stocks, APN News & Media, publisher of the New Zealand Herald newspaper, fell 4.2% to $2.97. Fisher & Paykel Appliances slid 1.7% to 57 cents and Auckland International Airport declined 1.6% to $1.84.

Businesswire.co.nz

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