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MARKET CLOSE: NZ shares drop as Goldman spurs global selloff; NPX falls

Monday 19th April 2010

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New Zealand shares fell, joining a global selloff as fraud charges against Goldman Sachs Group rattled financial markets and spurred some investors to take profits on equities. Nuplex Industries led the decline.

The NZX 50 Index dropped 29.11, or 0.9%, to 3282.19, the biggest decline in more than a month. Within the index, 31 stocks fell, six rose and 13 were unchanged. Turnover was about $53 million.

The selloff in the local bourse was relatively light compared to the 1.6% drop in the Standard & Poor’s 500 on Friday. Before then, the US benchmark index had advanced 8.6% since the start of February to reach the highest level since late 2008.

Japan’s Nikkei 225 Index tumbled 1.8% today while Australia’s S&P/ASX 200 sank 1.5%. Commodity prices sold off and the greenback advanced as investors eschewed risk.

“A lot of investors had felt the market had run reasonably hard since February – this might just be an opportunity to take a pause,” said Angus Gluskie, who oversees US$300 million at White Funds Management in Sydney. Any fallout from the Goldman charges “is likely to be limited and specific and doesn’t necessarily detract from the outlook for economies,” he said.

Nuplex, the specialty chemicals company, fell 4.3% to $3.12.

New Zealand Oil & Gas sank 3.2% to $1.51 as the price of crude oil retreated for a third day. New York crude fell as low as US$81.66 a barrel in Asia’s day. The company also confirmed today that its 10%-owned Hoki-1 well will be plugged and abandoned after finding no hydrocarbons. Pan Pacific Petroleum fell 2.6% to 37 cents. Pike River Coal declined 2.7% to $1.08.

Air New Zealand fell 2.8% to $1.37 as airlines delayed or rescheduled flights affected by ash from the Iceland volcano which has affected much of Northern Europe.

Australia & New Zealand Banking Group declined 3% to $32.51 and Westpac Banking Corp. fell 2.3% to $36, pacing declines in lenders on the ASX amid concern the Goldman charges may be a sign of increased scrutiny of financial firms.

Skellerup Holdings fell 4.8% to 60 cents and Guinness Peat Group declined 2.2% to 89 cents.

Telecom fell 0.5% to $2.17. The company’s credit rating was cut one notch to A- by Fitch ratings on Friday, a day after Telecom lowered its earnings guidance for the next three years and forecast higher than expected capital spending.

PGG Wrightson, New Zealand’s biggest rural services company, was the biggest of a handful of gainers, rising 1.8% to 56 cents.

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