MARKET CLOSE: Shares fall with global dip; Nuplex down

Wednesday 8th April 2009

Shares fell as a ripple of concern about earnings pushed down equities in Europe, the U.S. and Asia. Nuplex Industries slipped as shareholders prepared to cough up for their rights.

The NZX 50 Index fell 43.56, or 1.7%, to 2568.9, its second daily decline. Within the index, 27 stocks fell, 10 rose and 13 were unchanged. Turnover was $115.7 million, one of the highest this year.

Telecom, the biggest company on the NZX 50, fell 4.8% to $2.37. This year it has gained 8.7%. Contact Energy, the next biggest stock, declined 4.2% to $5.70.

The Dow Jones Industrial Average fell 3.2% yesterday. In Asia today, the Hang Seng Index has dropped 4.2% to 14324.75 and the Nikkei 225 Index is down 2.7% to 8595.01.

Alcoa, the first company on the Dow to report for the first quarter, posted a net loss of US$497 million, blaming weak prices. The aluminium producer supplies industries ranging from autos to appliances.

"There's pressure on earnings which we expect to continue in the next couple of quarters," said Guy Elliffe, head of equities at AMP Capital Investors in Wellington. "But the market is pretty aware of it and valuations are pretty compelling."

Gainers today included Fisher & Paykel Healthcare, up 6% to $2.99, Kiwi Income Property Trust, which rose 2.3% to 91 cents and Hallenstein Glasson Holdings, up 2% to $2.40.

Nuplex fell 3.2% to 30 cents and sank as low as a record 27 cents during trading today. Shareholders must take up their 7-for-one entitlement at 23 cents a share or see their holding diluted by a crushing 87.5%. Since trading at $2.30 on October 3, the company has shed $165 million of market value. The company has urged investors to take or sell their rights before their due dates this month.

"Shareholders have got the letters with the rights entitlements," AMP Capital's Elliffe said. They're "realizing how much they have to stump up."

Nuplex published a letter exchange with the Shareholders Association in which it defended terms of top-up arrangements in its placement as part of its placement.

Restaurant Brands rose 1.2% to 86 cents after the holder of New Zealand's KFC, Starbucks, and Pizza Hut franchises, increased its full-year dividend by 7.7% and said its KFC chain boosted annual sales to a record $211.5 million. Net profit fell 1.2% to $8.4 million on declining sales at its Pizza Hut stores.

Fletcher Building slipped 1.6% to $6.05 even after Australian data suggested its housing market may be picking up. Home-loan approvals rose 0.4% in February, according to government figures, while a Westpac Banking index showed consumer sentiment rose 8.3% this month.

Fletcher is New Zealand's largest supplier of insulation products and may benefit from an agreement between the Key administration and the Greens to start a home insulation fund. It also dominates the Australian market, where homeowners will benefit from federal funds towards insulation.

Freightways Ltd. fell 2.9% to $2.70 after the owner of New Zealand Couriers completed a $45 million placement to repay debt and strengthen its balance sheet.

Businesswire.co.nz

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