NZ shares drop to 4-year low, led by Fletcher Building, Infratil
Nov. 20 – New Zealand shares fell, sending the NZX 50 Index to a four-year low, as evidence piles up of a broader
global recession that will erode corporate earnings.
The NZX 50 fell 61.713, or 2.3%, to 2644.869, the lowest level since June 2004. The index has dropped on 10 of the 14
trading sessions so far this month and declined about 35% this year. Within the index, 34 shares fell, two rose and 14
were unchanged.
Fletcher Building fell 3.9% to NZ$5.48 after U.S. Commerce Department figures showed housing starts and permit fell to
record lows last month, suggestion the American housing recession will sap demand for the company’s steel roofing tiles
and laminated board. Infratil fell 4.5% to NZ$1.71 and Skellerup Holdings declined 5.1% to 75 cents.
“We’re right in the second phase of the cycle, where firms are feeling the impact of the liquidity crunch and cost of
credit,” said Mark Peterson, managing director at Direct Broking.
“It may well take six months, 12 months to get through that. I don’t think there’s going to be places that can hide
from it,” he said.
The decline in the New Zealand market is lagging behind the slump in the bourses of other nations. The Dow Jones
Industrial Average tumbled 5% and the Standard & Poor’s 500 Index dropped 6% in New York. Australia’s S/ASX 200 Index was down 4% in early trading after Babcock & Brown, which is slashing costs and selling assets to try to avert a default on its debt, had its stock halted because
of a dispute with one of its banks. Mining company BHP Billiton fell more than 6% and Commonwealth Bank of Australia
dropped 4.3%.
In New Zealand, children’s clothing retailer Pumpkin Patch fell 4.4% to 86 cents, its third daily tumble after chief
executive Maurice Prendergast said 2009 earnings would weaken after an “extremely difficult” first quarter.
Fisher & Paykel Healthcare, which today posted a 51% jump in first-half profit and forecast a surge in the full-year result,
fell 1.3% to NZ$3.08. F Appliances slid 4.4% to NZ$1.31.
Air New Zealand, which yesterday announced plans to cut 200 workers because of a drop in demand, fell 1.1% to 88 cents.
New Zealand Oil & Gas declined 2.5% to NZ$1.17 after crude oil for December delivery fell 1.4% to US$53.62 a barrel in New York, the
lowest close in 22 months.
Direct Broking’s Peterson said on the basis of fundamentals “things look a little cheap but it’s very hard to know the
environmental impact on future earnings.”
(Businesswire)