NZX CLOSE: NZ shares edge lower; Goodman, property trusts slide

Thursday 5th November 2009

New Zealand shares fell, led by property investors AMP NZ Office Trust and Kiwi Income Property Trust after Goodman Property Trust posted weaker earnings and investors pondered capital raisings in the sector.

The NZX 50 Index fell 22.20, or 0.7%, to 3144.51, the third decline in four days. Within the index, 17 stocks fell, 22 rose and 11 were unchanged. Turnover was a lackluster $53.7 million.

AMP NZ Office fell 3.7% to 78 cents and Kiwi Income declined 2.8% to $1.05. Goodman Property today reported a 9.8% decline in first-half distributable profit to $38.5 million as it paid down debt and lost some tenants. The trust also plans to raise $100 million through a bond issue to repay bank debt, it said today. Goodman fell 1.9% to $1.01.

“There was a little bit of disappointment in Goodman’s result – there was nothing to make you buy more,” said Grant Williamson, a director at brokerage Hamilton Hindin Greene. Fund raising plans may also be weighing on the sector, he said.

Kiwi Income announced on Nov. 2 that it would offer up to $150 million of five-year convertible notes to reduce bank debt and bolster funds for new investments.

ING Property Trust fell 1.3% to 79 cents while insurer and fund manager Tower Ltd. declined 1.8% to $1.67.

The NZX 50 has drifted lower since reaching a 13-month high on Oct. 20. It had rallied 15% since early July.

“The equity market has said the economy has to improve – the economy now has to prove that’s the case,” Williamson said.

Government figures today showed the unemployment rate climbed to 6.5%, the highest since 2000, the participation rate slipped to 68% in the September quarter from 68.4%.

Separately, credit reference agency Veda Advantage today said the lagged impact of slower and defaulting payments between businesses is showing up now, just as the recession is ending.

"The recession may technically be over, but the bad times still have to feed through the economy and businesses will be feeling it well into next year,” said Veda managing director John Roberts. “The tough times aren't over yet."

Veda reported a 49.5% increase in commercial defaults in the year to October, compared with the same 10 month period last year.

Fletcher Building, the nation’s biggest construction company and the largest company on the bourse, fell 1.6% to $7.86. Contact Energy, the largest utility, fell 2.4% to $5.99 and Telecom Corp., the biggest phone company, declined 2.4% to $2.48.

Rakon Ltd., the manufacturer of crystal oscillators used in navigation systems and mobile phones, rose 1.8% to $1.16. The company is well-placed to benefit from growing demand for GPS systems as they become standard in a wider range of mobile phones, Stephen Walker, head of asset management at Goldman Sachs JB Were, said yesterday.

Fisher & Paykel Appliances gained 4.8% to 65 cents, leading the index higher, while Fisher & Paykel Healthcare rose 1.9% to $3.18 as the New Zealand dollar weakened below 72 U.S. cents. A lower kiwi lifts the value of overseas revenue when it is brought home.

PGG Wrightson, the nation’s biggest rural services company, gained 1.7% to 61 cents on optimism gains in prices for milk powder in Fonterra’s online auctions and other evidence of rising commodity prices bode well for the rural sector.

Businesswire.co.nz

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