MARKET CLOSE: NZ stocks fall on China rate hike

Wednesday 20th October 2010

New Zealand stocks fell for the second time in three sessions as investor risk appetite dried up after China unexpectedly hiked interest rates to curb inflation in the world’s second biggest economy.

Hallenstein Glasson, NZX and Air New Zealand paced falls on the exchange.

The NZX 50 Index fell 14.92 points, or 0.5%, to 3,243.01. Within the index, 29 stocks fell, 12 rose and nine were unchanged. Turnover was $76.5 million.

Markets across the Asia Pacific region fell today after China’s central bank raised its interest rate 25 basis points for the first time since 2007. In afternoon trade, Japan’s Nikkei Index fell 1.7% to 9,376.81, Hong Kong’s Hang Seng Index fell 0.9% to 22,557.98, and Australia’s ASX 200 fell 0.9% to 4,615.60.

“You can read the Chinese interest rate decision two ways, namely that growth in mainland China’s economy is good, and the other is the cheap credit that makes equities look attractive relative to bonds is coming to an end,” Tower Asset Management equities manager Paul Robertshawe said. “We’ll just have to wait and see how it turns out.”

Hallenstein Glasson (NZX: HLG ) fell 3.4% to $4.31, pacing declines on the main board of the exchange. NZX (NZX: NZX ) fell 3% to $1.61 after going ex-dividend today, Air New Zealand (NZX: AIR ) fell 3% to $1.31, and outdoor retailer Kathmandu (NZX: KMD ) fell 2.6% to $1.85.

PGG Wrightson (NZX: PGW ) fell 1.8% to 55 cents after the company said its finance unit secured a commitment from Bank of New Zealand and Commonwealth Bank of Australia to extend bank facilities for three years.

Chief executive Mark Darrow said the extension of banking arrangements, which will be in the form of a $100 million three-year revolving credit facility, is a major step toward extending the duration of PGG Wrightson Finance funding.

Telecom (NZX: TEL ) fell 1.5% to $2.03 after its XT network experienced another outage, cutting off customers in the lower North Island and parts of the South Island this morning.

Sanford (NZX: SAN ) rose 6.8% to $4.40, pacing gainers on the main board after the fisheries company said it expects net profit to beat analysts’ forecasts as it benefits from better fish prices and its allocation of Emissions Trading Scheme units.

The company said net profit will be about $25 million in the year ended Sept. 30 with “steadily improving prices for many species” taking the edge off a strong kiwi dollar, while its allocation of emission trading units will bolster the bottom line by $3.4 million. That’s still a decline of about 36% from last year as the currency’s appreciation eroded Sanford’s profitability.

Restaurant Brands (NZX: RBD ) rose 2.4% to $2.58 after it posted a 52% rise in its first-half profits. The company kept its full-year guidance at between $24 million and $26 million, with consumer sentiment still uncertain.

Cavotec MSL (NZX: CAV ) rose 1.8% to $2.85 after it said it was considering a secondary offshore citing listing due to low levels of liquidity and declining volumes on the New Zealand stock market.

“For a stock that has no liquidity over here, it will be interesting to see if floating on Nordic exchange will create any more liquidity for them,” Robertshawe said.

AMP NZ Office Trust (NZX: APT )was unchanged at 77 cents after it offered to give more ground on its management fee as investors prepare to vote on whether to restructure the listed property entity into a company tomorrow.

The trust's manager will cut its fee further if the corporatisation bid goes ahead, adding a third progressive reduction if the portfolio grows above $1.5 billion.

Tourism Holdings (NZX: THL ) was unchanged at 75 cents after the company went ex-dividend today.

Businesswire.co.nz

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