MARKET CLOSE: Stocks fall; Nuplex, Cavalier lead decline

Monday 23rd February 2009

New Zealand shares fell, pushing the NZX 50 Index to a five-year low, as investors awaited Nuplex Industries' talks with banks to avert a breach of its loans and Cavalier Corp. sank on its outlook for weaker profits.

The NZX 50 fell 38.394, or 1.5%, to 2538.286, the sixth daily decline. Within the index, 35 stocks fell, 11 rose and four were unchanged. Turnover was NZ$62.6 million.

Nuplex tumbled 14% to NZ$1.25, leading the NZX 50 lower. The company said last week it needed agreement from its banks to loosen its loan terms to avoid a breach of its covenants as at Dec. 31. Carpet maker Cavalier sank 13% to NZ$1.50. On Friday it announced a 7% drop in first-half earnings and said profit may drop as much as 40% in the full year.

"Fundamentals are continuing to deteriorate," said Angus Gluskie, who helps manage about US$500 million at White Funds Management in Sydney. Economic data "is likely to continue to contain new negatives."

Investors will be awaiting Wall Street's response to reports that Citigroup Inc. is in talks with federal officials that may result in the U.S. government increasing its stake to as much as 40%, Gluskie said. Shares of the firm have slumped 92% in the past 12 months.

"There's plenty of debate about whether it's a net negative or a net positive," Gluskie said. "It will eliminate a level of uncertainty - the government is still prepared to stand behind them to prevent any kind of systemic collapse."

Tourism Holdings, New Zealand's biggest campervan operator, sank 11% to 49 cents and Fisher & Paykel Appliances declined 6.8% to 55 cents.

NZX, the operator of the stock exchange, fell 3.6% to NZ$5.40 after posting a 17% gain in first-half profit on cost cutting and an increase in sales of information services. Chief executive Mark Weldon said the profit was achieved in "extremely difficult trading conditions."

Sky City Entertainment was unchanged at NZ$2.72 after the country's biggest casino operator posted a drop in earnings before one-time items as the deteriorating economy squeezed its profit margin. Earnings before non-recurring items fell 13.4% to $55.6 million in the six months to December 31.

Property for Industry rose 0.9% to NZ$1.11 after the investment group managed by AMP Capital Investors held its final dividend unchanged from a year earlier and posted a 5.3% gain in distributable profit to NZ$15.7 million. The value of its property portfolio was reduced by NZ$43 million following an assessment by DTZ, Jones Lang LaSalle and CB Richard Ellis.

PGG Wrightson, the nation's biggest rural services company, gained 10% to 65 cents, clawing back some ground after tumbling 28% on Friday amid concern its balance sheet is weakening at a time it may need funds to repay debt and meet legal costs.

Australia's S&P/ASX 200 Index fell 1.5% to 3351.2. Fairfax Media fell 2.9% to A$1.02 after posting the first loss in its history because of weakening advertising revenue and a write-down of its mastheads and media licenses.

Bluescope Steel, Australia's biggest steelmaker, tumbled 11% to A$2.79 after the Melbourne-based company cut its dividend and said a global slump in demand will push it to a net loss in the second half.

BHP Billiton, the world's biggest mining company, fell 3.9% to A$29.32 while Macquarie Airports sank 7% to A$1.66.

Businesswire.co.nz

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