MARKET CLOSE: NZX 50 snaps 4-day rally; Telecom drops

Friday 1st May 2009

New Zealand’s benchmark NZX 50 Index snapped four days of gains, with Telecom Corp. dragging the index lower after rival Vodafone indicated a legal battle looms over their competing 3G networks.

The NZX 50 fell 20.66, or 0.8%, to 2719. Within the index, 29 stocks rose, 12 fell and nine were unchanged. Turnover was NZ$76.5 million.

Telecom dropped 6.7% to $2.63. Vodafone has begun legal proceeding because of a significant rise in customer complaints about “serious” interference on its network. Telecom chief executive Paul Reynolds denied the claims, saying it was “a piece of aggressive behaviour that betrays Vodafone’s insecurities about competition from Telecom’s new XT mobile network, just 13 days away from launch.”

Tap maker Methven led the index higher, climbing 9.4% to $1.16, while Fisher & Paykel Appliances, which gained an extension on its temporary debt funding facility, rose 4.4% to 48 cents.

Insurer Tower rose 2.9% to $1.40 after the ShareChat website reported that Forsyth Barr analyst John Cairns forecasts the company will post a 4.4% increase in net profit to $42.3 million this year and lift 2010 earnings to $44.3 million profit in 2010.

Briscoe Group rose 1.2% to 83 cents, bringing its one-month advance to 9.3%. The operator of homeware, Rebel sports goods, Urban Loft and Living & Giving chains, today forecast a gain in first-half profit as cost cuts help fatten its margins even as sales growth stalls.

“I have probably got a little less negative,” managing director Rod Duke said in an interview. “The cost of doing business – we have really done a fabulous job on that and its significantly different to what it was 12 months ago. But sales are flat – we’re literally making no headway in terms of sales.”

Warehouse Group, the biggest retailer on the exchange, climbed 3.1% to $3.70. Children’s clothing chain Pumpkin Patch rose 1.7% to $1.22.

Vector, the nation’s biggest gas and electricity distributor, fell 1.4% to $2.13. The utility plans to raise $150 million selling five-year bonds to bolster its finances.

Fletcher Building rose 0.6% to $6.74. The stock is rated a ‘buy’ by four of seven analysts who follow the company. Fletcher trades at 8.3 times earnings, lagging behind Australian rival Boral, which trades at 13 times earnings.

Steel & Tube Holdings, which sells steel building products, rose 3.2% to NZ$2.95.

NZ Farming Systems Uruguay halted its slide, gaining 3.6% to 57 cents. Goodman Property Trust gained 3.8% to 83 cents.

Businesswire.co.nz

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