MARKET CLOSE: NZ stocks retreat on China policy jitters

Tuesday 12th October 2010

New Zealand stocks fell for the second time in four sessions, mirroring declines across Asia after China tightened controls on its biggest banks.

Westpac, Pyne Gould and PGG Wrightson lead decliners on the day.

The NZX 50 Index fell 4.1 points, or 0.1%, to 3,230.8. Within the index, 20 stocks fell, 12 rose and 18 were unchanged. Turnover was $126.8 million.

Asian markets were broadly trading in the red after China boosted the level of cash six of its biggest banks need to keep on hand by half a percentage point to 17.5%, its first such move since May. Japan’s Nikkei was last 1.7% down at 9,421.1, Hong Kong’s Hang Seng Index was 0.3% down at 23,139.4, and Australia’s S&P ASX 200 was 1.6% down at 2,778.8.

“There has been a bit of weakness in overseas markets, which has seen us flat on the day,” Mint Asset Management portfolio manager Shane Solly says. “In Asia there is some weariness about a number of China policy changes. Still we are only just down though, and our market has been the outperformer in the region on the day.”

Westpac (NZX: WBC ) fell 2.3% to 29.85, leading declines on the NZX 50. Pyne Gould (NZX: PGC ) fell 2.4% to 41 cents, and Wrightson (NZX: PGW ) fell 1.8% to 56 cents.

Telecom (NZX: TEL ) fell 0.5% to 2.02, after the telephone company said it is re-pricing its bid to participate in the national ultra-fast broadband initiative, and hopes to hear within weeks whether it will be chosen as a partner in the $1.8 billion government-sponsored project.

The head of the national telco’s Chorus unit, Mark Ratcliffe, said the company has been “sharpening its pencil” since losing out in the first round of preferred partner choices, which were announced last month and went to three regional bids led by electricity network companies in Timaru, Whangarei, and the Waikato.

Sky City (NZX: SKC ) fell 0.3% to $2.93.

A report by Statistics New Zealand showed international guest nights rose 2% in August compared to the same month in 2009, but were down 5.5% month on month, according to Statistics New Zealand’s monthly accommodation survey. Domestic guest nights fell 1% over the same period, which resulted in flat overall growth with total guest nights in August down less than 0.1% a year earlier.

Cavalier (NZX: CAV ) fell 1% to $2.97 after the carpet maker said it would sell shares to existing shareholders for $2.94 apiece as part of its dividend reinvestment plan. The price is the volume weighted average all trades on the NZX between October 4 and 8. Cavalier's dividend is payable on Friday.

Fisher & Paykel Appliances (NZX: FPA ) rose 1.8% to 58 cents, leading gains on the day. Michael Hill (NZX: MHI ) rose 1.4% to 71 cents, and Sanford (NZX: SAN ) rose 1.3% to $4.05.

The NZSX Property Group Index rose 0.5% to 819.9 points, with the strong run in property stock “very pronounced,” Solly said.

DNZ Property Fund (NZX: DNZ ), which joins the NZX 50 effective as of next week, rose 1.7% to $1.18. Argosy Property Trust, the investor formerly known as ING Property, rose 1.3% to 78 cents, Kiwi Income Property Trust (NZX: KIP ) rose 1% to $1.06, and Property for Industry (NZX: PFI ) rose 0.8% to $1.22.

“Property stocks have been best performers since the start of the month, and are attracting investors for good yields with interest rates flat globally,” Solly said.

Diligent Board Member Services (NZX: DIL ), which provides software support services to company boards of directors, rose 7.8% to 69 cents after announcing it had achieved its goal of breaking even at the cashflow level in the September quarter.

Third-quarter sales rose 68% to US$2.2 million, taking its sales for the nine months ended September 30 to US$5.9 million, up 69% on the same nine months last year.

SmartPay (NZX: SPY ) was unchanged at 35 cents after it announced that it had signed a heads of agreement with Generate Group to provide EFTPOS services to the Australian clubs and the hospitality sector.

The two companies will integrate their payment systems, which will then be offered Generate's existing customer base of more than 200 clubs.

Businesswire.co.nz

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