MARKET CLOSE: NZX 50 ends lower as China worries bubble; STU, AIR down

Tuesday 11th May 2010

New Zealand shares shed their intraday gains to end the session lower, as fears China will act to cool its economy reverberated through Asia. Steel & Tube Holdings led the decline while PGG Wrightson led gainers.

The NZX 50 Index fell 3.6, or 0.1%, to 3167.02, the fourth decline in five days. Within the index, 21 stocks rose, 16 fell and 13 were unchanged. Turnover was $154 million.

Equity markets fell across much of Asia after China reported a 2.8% jump in consumer prices in April from a year earlier, the fastest clip in 18 months. The figures stoked fears China will increase measures to cool the world’s fastest-growing major economy, sapping demand for Australia’s raw materials, Japan’s finished goods and New Zealand’s wool, dairy and logs.

Japan’s Nikkei 225 index fell 0.7%, Australia’s S&P/ASX 200 slid 0.6% and Hong Kong’s Hang Seng declined 1.4%. Markets had climbed early in the day, following a surge in US and European stocks on optimism about Europe’s 750 billion rescue fund.

“We will get caught up more in China,” said Paul Robertshawe, who manages $220 million at Tower Asset Management in Wellington. “The Europe is not as critical as China” given that Australia, New Zealand’s biggest market, depends on sales to China to underpin its economic growth, he said.

Steel & Tube, which sells steel building products such as reinforcing rod, fell 1.9% to $2.55. The company is rated a ‘hold’ based on six recommendations compiled by Reuters. Air New Zealand fell 1.6% to $1.24 and Fisher & Paykel Healthcare dropped 1.5% to $3.40.

Kathmandu Holdings fell 1.8% ton $2.13 as government figures showed consumer spending on credit and debit cards fell in April from the previous month. The value of electronic point of sale transactions across all industries fell a seasonally adjusted 1% last month, after gaining 1.2% in March, according to Statistics New Zealand.

“The retail stats are not too flash,” Robertshawe said. “”If people truly want to de-gear then the growth rate in consumer discretionary and consumer durables” will be hurt.

New Zealand Oil & Gas fell 0.7% to $1.49, reversing an earlier gain, after announcing that the upper section of the first of two exploration wells in the Tui oil field has been abandoned because of technical difficulties. Drilling had reached a little over a third of its target 3,900 metre depth, and a new well will be attempted, it said.

PGG Wrightson, New Zealand’s biggest rural services company, gained 3.8% to 55 cents after the receivers of Rural Portfolio Investments sold that company’s 48.6 million shares in Wrightson at 52 cents apiece, removing an overhang in the market.The shares are being helped by stronger commodity prices, which lift incomes of Wrightson’s farmer customers, and as some investors picked up the stock near six month lows, Robertshawe said.

Businesswire.co.nz

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