MARKET CLOSE: NZX 50 falls below 3000; NZS drops

MARKET CLOSE: NZX 50 falls below 3000; Farming Systems, NZO, FPA pace decline

By Jason Krupp

July 16 (BusinessDesk) – New Zealand stocks fell, pushing the NZX 50 Index below 3000 as weaker-than-expected U.S. economic data stoked concern global growth may falter. NZ Farming Systems Uruguay Ltd., New Zealand Oil & Gas Ltd. and Fisher & Paykel Appliances Holdings Ltd. paced the decline.

The NZX 50 fell 16.6, or 0.6%, to 2,985.8. Within the index 26 stocks fell, seven rose and 17 were unchanged. Turnover was $51.2 million.

The volume of domestic corporate news has reduced in the run-up to the earnings season, meaning investors are giving more weight to overseas developments. The Dow Jones Industrial Average and the Standard & Poor's 500 Index both fell about 0.6% yesterday. In Europe, the U.K.’s FTSE 100 fell 0.8%, France’s CAC 40 dropped 1.4% and Germany’s DAX declined about 1%.

“There is a real dearth of news coming out from companies and most are in the blackout period ahead of reporting season, and we’ve seen quite a noticeable drop in volumes,” said Craig Brown, who helps manage $1.1 billion at ING New Zealand Ltd. “In this environment the market particularly susceptible to influence from offshore markets and this is what we’ve seen recently.”

NZ Oil & Gas, the energy exploration and production company, fell 3.9% to $1.25 as the market reacted negatively to news that company’s latest drilling venture on the Tui oilfield was approaching target depth with no report yet of commercial quantities of hydrocarbons. This is the company’s second exploration well on the field, the first of which failed to find any commercial reserves.

“The update that (NZOG) are getting close to target depth in the Tui oilfield has taken some off the shine off the shares because it notably didn’t mention any sign of hydrocarbons which you would expect to come gushing out of the well,” Brown said.

Pacing decliners, Farming Systems, the South American dairy operator, fell 4.7% to 41 cents and Fisher & Paykel Appliances, the whiteware manufacturer, fell 3.6% to 53 cents.

Wealth manager AMP Ltd. fell 2.4% to $6.46 after its rival bidder for Axa Asia Pacific, National Australia Bank, said it is in talks with the target company to extend a takeover agreement.

AMP already has Australian and New Zealand regulator approval to acquire Axa, while NAB’s superior offer didn’t get approval, meaning the lender may have to sell assets to win over regulators.

Pyne Gould Corp., the finance company, fell 2.4% to 40 cents and Pike River Coal Ltd., the coal mine operator, fell 2.1% to 95 cents.

Pacing gainers, New Zealand Refining Co., the Whangarei-based refinery operator, rose 4.9% to $3.40, and Rakon Ltd., the crystal oscillator manufacturer, rose 1.6% to 93 cents.

Shares in Cavalier Corp., the only listed carpet-maker in New Zealand, rose 1.6% to $2.50, after the company announced that full-year profit would come in higher than forecast. Profit is expected to be $16.3 million to $16.7 million in the year ended June 30, up from its previous guidance for tax-paid earnings of between $14.5 million and $15.5 million and is as much as 22% up on the previous year’s $13.7 million.

Brown said some of the positive momentum from this news was eroded by tax rules changes, which is expected to reduce profits to an estimate $11 million.

Air New Zealand Ltd., the national airline, were unchanged at $1.03 after the company quashed media speculation that its proposed alliance with Virgin Blue, which is aimed at cutting costs on the intensely competitive Tasman routes, will involve buying shares in the Australian airline.

PropertyFinance Group Ltd., the failed finance company, has been delisted from the NZX after shareholders passed a special resolution to place the company into liquidation. The delisting shares will delisted as of the close of business on July 21.

(BusinessDesk)

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