MARKET CLOSE: NZ stocks fall as jobless rise; FRE drops

MARKET CLOSE: NZ stocks fall as unemployment rises; Freightways drops, Wrightson gains

By Jason Krupp

Feb. 3 (BusinessDesk) - New Zealand stocks fell after an unexpected rise in fourth-quarter unemployment underlined the tepid state of the economy. Freightways Ltd. led decliners and PGG Wrightson Ltd. rose.

The NZX 50 Index fell 2.41 points, or 0.07%, to 3349.89. Within the index, 17 stocks fell, 20 rose and 13 were unchanged. Turnover was $112.7 million.

New Zealand’s jobless rate rose to 6.8% in the three months to Dec. 31 from 6.4% previously, according to Statistics New Zealand, outstripping market expectation that it would hold steady.

"The Reserve Bank is on notice as to whether they should be tightening at the moment," said Shane Solly, portfolio manager at Mint Asset Management. Interest rates need to stay on hold for longer, "given the mixed economic environment."

Freightways, the express package company, fell 2.1% to $3.26, with the stock easing back from a near nine-month high. The stock is rated a "hold" by four out six market analysts according to a Reuters poll.

Telecom Corp., New Zealand biggest phone company, fell 0.9% to $2.22, a day after the company said its weighting on Australia's benchmark ASX 200 Index is likely to fall between 25% and 30% due to a change in ranking methodology.

"Traders have certainly taken some positions on the back of that, but who knows how long that will go on for," Solly said.

Auckland International Airport Ltd., the country's busiest gateway, fell 0.5% to $2.23. Operations at Cairns and Mackay airports, in which AIA owns a 25% stake, have been shut down until further notice as Cyclone Yasi, a category five hurricane, made landfall on Australia's North East coast.

Building Society Holdings, the financial serves company formed by the merger of Pyne Gould's Marac Finance unit and the Southern Cross and Canterbury building societies, fell 1.1% to 85 cents on its third day of trading on the NZX.

Briscoe Group was unchanged at $1.36 after the homeware and sporting goods retailer reported marginal sales growth for the year, with stronger performance over the Christmas period helping the company to sidestep general malaise in the wider retail sector.

Unaudited sales for the year to Jan. 30 were 0.6% higher than the previous period at $419.3 million. On a same store basis, group sales for the year were 2.4% higher than in the previous 12-months.

The company said it expects net profit for the year to exceed $23 million, about 10% higher than the same period last year, once a $2.4 million tax
liability related to changes on building depreciation is factored in.

Wrightson, the rural services company facing a partial takeover from Singapore's Agria Corp., rose 3.85 to 55 cents, leading gainers on the exchange.

Solly said there is some uncertainty around the stock with the market waiting to "see more detail and understand the risk around the offer".

NZX Ltd., the security markets operator, rose 1.1% to $1.77 after the stock exchange operator said trading activity in January was lacklustre.

The value of total trades shrank 10% to $1.3 billion from the same month in 2010, while the volume of transactions fell 1.2% to 35,711.

Still, the market's equity capitalisation grew 4.9% to $56.7 billion, or 29.9% of GDP after a year when the NZX 50 outperformed its trans-Tasman counterpart, the ASX/S&P 200.

New Zealand Wool Services International Ltd., the wool exporter and scourer, was unchanged at 47 cents on the NZAX, after it lashed out at an approach from carpet-maker Cavalier Corp. to buy its souring assets.

Chairman Derek Kirke said the company’s assets aren’t for sale, and that the Cavalier subsidiary would create an unhealthy monopoly in the market.
Shares in Cavalier rose 0.7 to $3.10.

(BusinessDesk)

© Scoop Media