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

Wednesday 10th December 2008

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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