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MARKET CLOSE: NZ stocks mixed; Fletcher falls, GPG gains

Wednesday 22nd September 2010

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New Zealand stocks were mixed, with Fletcher Building falling as some investors took advantage of its 11% gain this month to sell, while Guinness Peat Group rose after announcing four independent directors to re-evaluate strategy.

The NZX 50 Index fell 2.2 points, or 0.06%, to 3,234.5. Within the index, 15 stocks fell, 19 rose and 16 were unchanged. Turnover was $81.8 million.

Fletcher Building (NZX: FBU ) fell 0.7% to $8.60 as profit takers set in. The stock has gained almost 11% in value since September 3 as investors anticipate its involvement in Canterbury earthquake reconstruction efforts, with the repair bill estimated at $4 billion.

“It seems that some people have had their ride and are getting off the bus,” BT Funds Management's Paul Robertshawe said.

Guinness Peat Group (NZX: GPG ) rose 1.5% to 67 cents after the company named four independent directors in a boardroom shakeup aimed at reappraising strategy at the under-performing investment company.

GPG has expanded its board to seven, while director Ron Langley has resigned, following the departure of high-profile New Zealand-based board member Tony Gibbs in a public spat over options for restoring value to the company. GPG’s shares were previously as high as $1.80 in mid-2006.

Pumpkin Patch (NZX: PPL ) was unchanged at $1.65 after the company announced that it had returned to profit this year on the back of a renewed focus on inventory margin, cost cutting and restructuring. The Auckland-based company reported net profit of $25.5 million in the 12 months to July 31, from a loss of $26.7 million a year ago when it shut down 15 unprofitable stores in the US. Still, total revenue fell 7.4% to $382.2 million.

“Despite a good net profit, Pumpkin Patch’s revenue numbers show that trading conditions out there are tough,” Robertshawe said. “Anyone expecting near-term earnings upgrades is going to be disappointed - there is no enthusiasm out there in the market right now.”

ING Medical (NZX: IMP ) fell 2.4% to $1.22. Yesterday the company said that it is conducting due diligence on Essential Healthcare Trust, an Australian health clinic investor managed by Orchard Capital Investments. Essential owns A$152 million of hospital assets according to its 2009 annual report. The bid is seen as an ambitious acquisition by some analysts in the market.

Telstra (NZX: TLS ) fell 2% to $3.50, PGG Wrightson, the financial services firm, fell 1.7% to 58 cents and Telecom (NZX: TEL ) fell 1.5% to $2.03.

Restaurant Brands (NZX: RBD ) fell 1.2% to $2.56, and eased back from the all time high of $2.60 it reach yesterday on the back of solid second quarter sales.

Hallenstein Glassons (NZX: HLG ) rose 4.75 to $4.20, pacing gainers on the NZX 50.

Steel & Tube (NZX: STU ), which is expected to benefit from the Canterbury earthquake, rose 1.2% to $2.48.

Pike River Coal (NZX: PRC ) rose 0.9% to $1.13 as investors anticipated the company’s hydro-mining operations to come on line shortly. Robertshawe said there are still a number of unknowns and advised a “wait and see” approach.

Shares in Affco (NZX: AFF ) were unchanged at 36 cents after the company’s board endorsed a takeover bid from major shareholders Talley’s Group.

Talley’s had earlier declared their bid unconditional having secured Hugh Green Group’s holding in the company. That means shareholders will receive payment within seven days.

New Zealand’s current-account balance turned to a deficit of $880 million in the three months ended June 30, from a revised surplus of $159 million in the first quarter, according to Statistics New Zealand. The gap amounted to 3% of gross domestic product, up from 2.4% in the first quarter. Economists had forecast a quarterly deficit of $500 million, or 2.8% of GDP, according to Reuters.

New Zealand employees were more downbeat about the state of the labour market, and pared back their optimism for its recovery, according to the Westpac-McDermott Miller Employment Confidence Index. The survey showed the number of pessimists about current employment conditions grew, and continued to outweigh the number of optimists, and comes as a consensus of economists’ forecasts from the New Zealand Institute of Economic Research points to a slow recovery in the labour market over the coming years, with unemployment tipped to creep back up in the March 2011.

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