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Market Open: NZX 50 edges lower, Westpac falls on share sale

Wednesday 10th December 2008

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New Zealand stocks were little changed, with the NZX 50 Index edging lower after Westpac Banking Corp. resumed trading after selling shares at a discount.

The NZX 50 fell 8.255, or 0.3%, to 2716.02 as at 11am in Wellington. Within the index, 11 stocks fell, seven rose and 32 were unchanged. Westpac fell 5.1% to $20.50 on the NZX after completing its A$2.5 billion placement of shares to bolster its capital. The lender sold shares at A$16 apiece, 11% below their closing price on the previous day. ANZ Banking Group declined 2.7% to $17.20.

New Zealand Oil & Gas sank 1.6% to $1.25 after the US Energy Department predicted global demand for crude oil will shrink 0.5% next year, the first contraction since the early 1980s. Crude oil for January delivery fell 1.7% to US$42.96 a barrel on the New York Mercantile Exchange. Pike River Coal dropped 1% to 95 cents.

The decline in the NZX 50 follows weaker markets in the US, where the Dow Jones Industrial Average dropped 2.7% after companies including FedEx Corp. forecast earnings that lagged behind analysts' estimates.

In New Zealand, Warehouse Group, the biggest retailer on the NZX 50, fell 0.6% to $3.26 after announcing it would withdraw from liquor retailing after being turned down for a licence for its Albany store. Chief executive Ian Morrice said the decision was also a consequence of the decision to exit its Xtra grocery format and higher costs to monitor liquor sales.

Cavalier gained 1.1% to $1.82, gaining from its lowest level in at least a decade. Of four analysts who follow the stock, one rates it a 'buy,' two recommend it as a 'hold' and one has it as an 'underperform.'

Freightways fell about 2% to $2.95.

By Jonathan Underhill

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