MARKET CLOSE: NZ stocks fall; NZO, TEL, RAK drop

MARKET CLOSE: NZ stocks fall; NZO, TEL, RAK drop

By Jason Krupp

July 15 (BusinessDesk) – New Zealand stocks fell, pacing equity markets across Asia after the pace of growth slowed in China and the Federal Reserve gave a downbeat view of the U.S. economy. New Zealand Oil & Gas Ltd., Telecom Corp. and Rakon Ltd. declined.

The NZX 50 fell 25.1 points, or 0.8%, to 3,002.3, the second decline in 10 sessions. Within the index 26 stocks fell, 15 rose and nine were unchanged. Turnover was $50.4 million.

Markets in Asia were trading lower across the board, after the Federal Reserve said the U.S. outlook has softened. This was compounded by weaker growth data from China, which eased to a 10.3% pace in the second quarter after government pressure on credit, investment spending and property speculation.

Japan’s Nikkei down 0.9% to 9,707.8, Hong Kong’s Hang Seng Index down 0.3% to 20,490.4 and Singapore’s Straits Times Index was 0.2% down at 2,946.9. Australia’s S&P/ASX 200 dropped 24.5 to 4437.9.

“Australia has been down today on a softer growth forecast from China, and we’ve just followed developments across the Tasman,” said Grant Williamson, a director at Hamilton Hindin Greene. “We’re waiting for earnings season to start both here and in the U.S. Over last two years companies have been cutting costs, so were hoping we might see some earning surprises on the upside.”

NZOG fell 3.6% to $1.30 after it was announced that the second of two wells being drilled in the Tui oil field prospect was approaching the target depth of 3820 metres. The first of the two wells, Tui SW-2, showed uncommercial quantities of hydrocarbons and was plugged for possible future use as a gas storage reservoir. NZOG is a partner in the field.

Pacing decliners, Rakon Ltd, the crystal oscillator manufacturer, fell 4.2% to 92 cents, and PGG Wrightson Ltd, the rural services group, fell 4.1% to 47 cents.

Shares in Telecom Corp., New Zealand’s largest telecommunications company, fell 3.6% to $1.90. Williamson said the price was being driven by nervous sentiment with no real news behind the move.

“In the last five days we’ve seen a shift in away from this as offshore markets strengthened, but investors are still cautious and any bad news is likely to drive them back on the defensive,” said Williamson.

Pacing gainers on the NZX 50, New Zealand Refining Co., the Whangarei-based refinery operator, rose 2.5% to $3.24, Pyne Gould Corp., the financial services company, rose 2.5% to 41 cents and South American-based dairy farm operator NZ Farming Systems Uruguay Ltd., rose 2.4% to 43 cents.

Allied Farmers Ltd., the finance company that took on the Hanover and United loan books in a debt-for-equity swap last year, rose 17.7% to 40 cents after the company confirmed the unconditional sale of the second stage of Queenstown’s undeveloped Five Mile block which the company has previously indicated would sell for more than its $23.2 million valuation.

Shares of Allied have slumped 70% this year after the company was forced to write down the value of loans purchase from Hanover and United Finance by about two thirds.

Shares in Nufarm Ltd., the agricultural chemicals maker part-owned by Japan’s Sumitomo Chemical, tumbled 27.7% to A$3.79 on the ASX after the company slashed its full-year guidance on weaker sales in North America, Europe and Australia.

The shares resumed trading today after being halted for a trading update. Full-year operating profit is now expected to be A$55 million to A$65 million, down from previous guidance of A$110 million to A$130 million.

(BusinessDesk)

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