MARKET CLOSE: NZX 50 snaps three-day rally on stretched valuations; Tower falls
Sept. 21 (BusinessWire) – New Zealand shares snapped a three-day rally amid concern the 14% gain in the benchmark NZX 50
in the past month has pushed valuations beyond levels justified by the outlook for earnings. NZ Oil & Gas and Tower Ltd. led the decline.
The NZX 50 fell 0.8, or 0.02%, to 3155.65, edging down from an 11-month high. Within the index, 19 stocks fell, 23 rose
and eight were unchanged. Turnover was $79 million in a week where public holidays in some Asian markets this week are
expected to weigh on trading.
NZ Oil & Gas fell 4.6% to $1.65. The oil company’s relative strength index peaked out at 83 on Friday, on a scale where chart
watchers say a reading over 70 means a stock is poised to fall. Friday was the record date for NZOG’s full-year
dividend.
Tower declined 3.4% to $1.72. Its RSI reached 81 on Friday.
“Things are looking a bit overbought. RSIs are all up, no question about it,” said Ian Waddell, head of stockbroking at
McDouall Stuart. Still, any pullback may be modest as the 30 and 60-day averages on stocks are well below current
prices.
Telecom Corp., which was toppled by Fletcher Building Ltd. as the biggest company on the NZX 50 last week, fell 1.5% to
$2.63. Waddell said the stock has been hurt by concern about fall-out from the Australian government’s decision to split
up Telstra Corp. and the impact that may have on asset valuations.
Taylors Group Ltd., the commercial laundry business, fell 2.7% to $2.18 after Grant Samuel & Associates valued the company at between $2.22 and $2.58 a share including a premium for control. That puts Spotless
Group’s $2.25 offer to mop up the remaining shares of Taylors at the low end of a valuation range. Independent directors
still endorsed the offer, saying a counter-bid is unlikely.
Restaurant Brands, the fast-food chain, climbed 5% to $1.25, adding to its 16% surge on Friday, when the company
forecast an 87% jump in first-half earnings, excluding non-trading items, of about $8.7 million, reflecting a turnaround
at its Pizza Hut franchise and sustained sales growth for the KFC chicken outlets.
Pyne Gould Corp. fell 7.4% to $1 as investors await details of the finance and agricultural investment group’s capital
raising plans, which may top $160 million. A fully underwritten issue is expected to be taken up by existing
shareholders.
Skellerup Group, the rubber goods and milking equipment manufacturer, surged 6% to 53 cents, leading the NZX 50 higher.
(BusinessWire)