MARKET CLOSE: NZ shares join global rout on Greece woes; KMD, ANZ, PPP fall

Wednesday 28th April 2010

New Zealand shares fell, joining a global rout, after Standard & Poor’s slashed Greece’s credit rating to junk level and cut Portugal’s rating, stoking concern debt woes are spreading. Retailer Kathmandu Holdings and Pan Pacific Petroleum led the decline.

The NZX 50 Index fell 11.35, or 0.3%, to 3280.56, the second daily decline. Within the index, 32 stocks fell, just five gained and 13 were unchanged. Turnover was $80 million.

The slide in equity markets that began in Europe and on Wall Street has extended into Asia, with Japan’s Nikkei 225 index down 2.4% and Australia’s S&P/ASX 200 Index fell 1.2%. In the US, the Standard & Poor’s 500 dropped 2.3% and the UK’s FTSE 100 declined2.6%.

S&P cut Greece two notches to BB+ and warned that any debt restructuring could see bondholders recover as little as 30 cents in the dollar. It then cut Portugal two notches to an A- rating, raising fears that sovereign debt concerns were spreading to other so-called PIGS (Portugal, Ireland, Greece and Spain). The yield on Greek two-year government debt has soared to more than 16% from just 5.15% at the start of the month.

“Investors and the bond market have been increasingly nervous about Greece in recent weeks,” said Angus Gluskie, who manages US$300 million at White Funds Management in Sydney. The rating cut “crystallises the risk in investors’ minds,” he said. Given the gains in equity markets in the past 1 ½ months, the S&P move has been “a catalyst for profit taking.”

Kathmandu, the outdoor equipment retailer with stores in Australia and New Zealand, tumbled 3.8% to $2.30.

Pan Pacific Petroleum slipped 2.8% to 35 cents as a resurgence of global risk aversion helped lift the greenback and drove down the price of oil. New York crude sank for a third day, declining 1% to US$81.66 a barrel in Asia’s day.

Pike River Coal, which is raising $50 million to fund mine development until export revenue begins to flow, fell 0.9% to $1.14 and commodity prices weakened.

Cavalier Corp., the carpet maker, dropped 2.5% to $2.78.

ANZ Bank declined 2% to $31.95 and Westpac Banking Corp. shed 0.2% to $34.70, tracking a slide in lenders on the ASX.

The benchmark index did pare its gains through the trading session, helped by the National Bank Business Outlook, which showed businesses remained upbeat about the outlook for the economy this month. A net 50% of companies surveyed expect business conditions to improve over the next 12 months, up from a net 43% last month, the report showed.

AMP NZ Office Trust rose 1.3% to 76 cents, leading a handful of gainers on the NZX 50 today. Telecom rose 0.5% to $2.20 and Contact Energy rose 0.2% to $6.23.

“We, and most investors believe the Greece issue is one that will be ultimately solved,” White Funds’ Gluskie said. “Over the last two weeks we’ve started to see signs of a more meaningful recovery in the U.S.”

Air New Zealand ended the session unchanged at $1.37, paring an intraday decline after confirming it is in talks with Virgin Blue about an alliance on routes across the Tasman. No agreement has been reached, it said.

New Zealand Windfarms, the listed Manawatu windfarm operator, jumped 8% to 27 cents after announcing it has secured the $31.4 million of equity funding it sought to complete the Te Rere Hau extension and to buy out owners of the site. The equity raising is being underwritten by major shareholders including Vector, which was unchanged today at $2.15.

Warehouse Group fell 1.3% to $3.79. The retailer today announced the successful completion of its $100 million bond offer, which closed fully subscribed today.

Businesswire.co.nz

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