MARKET CLOSE: NZ stocks edge lower after MPS; F&P Healthcare falls

Thursday 11th June 2009

New Zealand shares fell for the first day in three after the central bank kept its key interest rate unchanged, helping drive the kiwi dollar higher and weighing on companies such as Fisher & Paykel Healthcare which derive revenue in U.S. dollars.

The NZX 50 Index slipped 31.42, or 1.1%, to 2796.54, the biggest decline since May 28. Within the index, 28 stocks fell, nine rose and 13 were unchanged. Turnover was $76 million.

New Zealand shares fell from the open and extended their slide through the day after Reserve Bank Governor Alan Bollard kept the official cash rate unchanged at 2.5%, citing weaker inflation and the prospects for the economy to climb out of recession.

The kiwi dollar climbed to 63.75 U.S. cents after the announcement and has advanced about 20% from its early March low.

F&P Healthcare (NZX: FPH ), which gets almost 80% of its revenue in U.S. dollars, fell 2.9% to $3.01 as most of the biggest companies on the index declined. Telecom (NZX: TEL ) fell 2.8% to $2.55 and Fletcher Building (NZX: FBU ) fell 2% to $6.75.

“People are really waiting for confirmation of recovery,” said James Lindsay, who helps manage about $400 million of equities at Tyndall Investment Management. “People are starting to talk about green shoots” and investors now want “some sort of solid evidence.”

New Zealand manufacturing activity slipped last month, remaining in contraction for a 13th straight month, with the strong kiwi dollar weighing on export industries, according to the Bank of New Zealand–Business NZ Performance of Manufacturing Index.

Manufacturing fell 1 point to 42.7 in May from April, ending two months of gains, the survey showed. A reading below 50 indicates a contraction.

Rakon (NZX: RAK ) led the index lower, falling 4.9% to $1.54.

F&P Appliances (NZX: FPA ) declined 4.6% to 63 cents, having retreated from as high as $1.17 on June 2 and June 3, when investors were showing their relief that the manufacturer had stitched up its capital raising plans.

Investors are now “digesting the rights issue,” which may be weighing on the stock, Lindsay said.

Carpet maker Cavalier (NZX: CAV ) rose 2.8% to $1.85 and Nuplex Industries gained 2.4% to 42 cents.

Tourism Holdings (NZX: THL ) fell 4.1% to 47 cents and has declined 27% this year. The campervan rental company has been hurt by a downturn in tourism, ,leaving it with the capital costs for a fleet of vehicles without the corresponding revenues.

The company is due to exit the NZX 50 on July 1, meaning some index-weighted funds won’t have to hold the stock. It is being replaced by fast-food chain Restaurant Brands (NZX: RBD ), which rose 2.9% to $1.06 today.

The holder of the Pizza Hut, KFC and Starbucks Coffee franchises this month reported the first revenue growth in four years from pizza, an intensely competitive market marked by discounting and special offers.

NZ Farming Systems Uruguay (NZX: NZS ) fell 3.9% to 49 cents. Government figures this week showed prices for New Zealand dairy exports slumped the most on record in the first quarter, which may have weighed on sentiment for the South American dairy farm developer.

New Zealand Oil & Gas (NZX: NZO ) rose 0.6% to $1.62 as crude oil rose above US$72 a barrel on signs of dwindling stockpiles in the U.S. Inventories tumbled by 4.38 million barrels to 361.6 million last week, according to the U.S. Energy Department.

Australia’s S&P/ASX 200 Index rose 0.6% to 4046.60 as reports that Chinese companies may bid for Fortescue Metals helped buoy mining and metals producers.

Fortescue has soared 50% this week and jumped 19% to A$4.28 today.

BHP Billiton extended its rally, climbing 1.9% to A$38.40 and Rio Tinto jumped 5.8% to A$77.29 as prices of metals firmed.

Copper futures fell from an eight-month high in Shanghai on concerns the biggest consumer of the metal will be awash in supplies after imports rose to a record 422,666 metric tons last month.

Businesswire.co.nz

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