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Market Close: NZ stocks fall on global rout, weaker profits

Tuesday 11th November 2008

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New Zealand shares fell, pushing the NZX 50 Index lower for the third day in four, amid signs of a weakening global economy and profit downgrades at home.

The NZX 50 fell 38.286, or 1.4%, to 2799.563, bringing is decline this year to 30%. Within the index, 30 stocks fell, six rose and 13 were unchanged.

Pike River Coal led decliners, tumbling 9.7% to NZ$1.02 amid falling commodity prices and signs that demand for coking coal from steel mills is waning.

Fisher & Paykel Healthcare was the biggest gainer, rising 3.6% to NZ$3.19 ahead of its Nov. 20 earnings release, which will show the benefit of a weaker kiwi dollar.

Australia's S&P/ASX 200 Index fell 2.9% to 3990.50 in late afternoon trading, after a report showed business confidence has slumped to a record low, stoking concern that economy may tip into recession. Babcock & Brown tumbled 22% and Alumina fell about 11%. BHP Billiton dropped 4.5% and Rio Tinto declined 3.9%.

Japan's Nikkei 225 Index fell 1.4% to 8958.17, paced by Canon, INPEX and Nikon. The IMF last week predicted the world's biggest economic blocs, the U.S., Japan and Europe, may suffer their first simultaneous contraction since WWII.

"It'd be very surprising if most countries in the world do not go into recession," said Brian Gaynor, who helps manage about NZ$250 million at Milford Asset Management. "Nearly every commodity stock across the world has been hammered."

New Zealand Oil & Gas fell 2.3% to NZ$1.25, crimping its gain this year to 10%.

Campervan operator Tourism Holdings Ltd. became the latest New Zealand company to forecast weaker earnings. Net income in the 12 months ending June 30 will be "well below" last year's NZ$14.3 million, Chairman Keith Smith told shareholders at their annual meeting today. The shares fell 2.2% to 88 cents and have tumbled more than 60% this year.

Dorchester Pacific traded at 9 cents, down from 15 cents when it last traded on Oct. 29. Chairman Barry Graham said in a statement his firm faces an "increasingly tight" deadline but could be in a position to repay 20% of principal to debenture holders before Christmas if they approve a deferred repayment plan. The stock has plunged 85% this year.

Companies that earn income in Australia, including Fletcher Building, fell on concern about a weakening Australian economy. Fletcher fell 2.8% to NZ$5.60. NZX traded shares of Australian financials fell in line with their stocks across the Tasman, as investors digested National Australia Bank's A$3 billion sale of shares.

Westpac declined 2.3% to NZ$19.45, ANZ Bank fell 1.8% to NZ$19 and insurer AMP dropped 4.8% to NZ$6.

Gaynor said there are opportunities to up selected stocks at relatively low prices though investors are only buying "in tiny proportions."

"There's a lack of conviction really - they're not buying 2 million or 3 million," he said. "The outlook is as gloomy as I have ever seen it. It's hard to get optimistic."


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