Friday 26th June 2009
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New Zealand shares were mixed after figures showed the economy sank deeper into recession in the first quarter and as investors await second-quarter earnings.
Fisher & Paykel Appliances, Ryman Healthcare and Sky City Entertainment Group led decliners. The NZX 50 index edged down 0.03% to 2770.61.
Within the index, 28 stocks rose, eight fell and 14 were unchanged. Turnover was $86.9 million.
F&P Appliances (NZX: FPA ) fell 2.9% to 66 cents, after raising $142.9 million through a rights issue which closed yesterday, with a shortfall of 4.9% on the offer.
New Zealand’s economy shrank 1% in the first quarter and a revised 1% in the fourth quarter of 2008, reflecting weaker household spending and a slump in manufacturing. Investors are now focused on the second quarter.
“Since the end of March the world has maybe stabilized,” said Andrew Michl, who helps manage $4 billion in New Zealand cash and fixed interest at ING New Zealand.
Telecom Corp. (NZX: TEL ), the biggest company on the NZX 50, slipped 0.8% to $2.65. Still, corporate profits probably haven’t recovered much, said Paul Harrison, equities manager at BT Funds Management.
“There are two different types of company in New Zealand at the moment – those experiencing flattish demand and others doing it tough.”
PGG Wrightson (NZX: PGW ) this week said profit dropped as much as 23% in the year ending June 30, reflecting a slide in spending by dairy, sheep and beef farmers. The shares rose 4.4% to $1.18 today and is down 12% this year.
“We’re in a hiatus waiting for the June reporting,” Harrison said. “Companies have very little visibility going forward. Their order books have become very short.”
Fletcher Building (NZX: FBU ) rose 0.2% to $6.40 after the company announced its Laminex unit will shutter a medium density fibreboard plant in Western Australia because of a downturn in demand. Sky City (NZX: SKC ) slid 2.2% to $2.68.
Harrison said the nation’s biggest casino operators has “quite a few loose holders” of stock after raising $185 million in a share sale earlier this year, even though its balance sheet wasn’t under pressure.
APN News & Media (NZX: APN ), publisher of the New Zealand Herald, rose 6.9% to $1.87, leading the index higher.
Pike River Coal (NZX: PRC ) rose 4.4% to $1.50 as commodity prices jumped. The mining company which has yet to produce any coal is rated ‘outperform’ based on the consensus of analysts polled by Reuters. Earnings will swing to a $38 million profit in 2010, as coal comes on stream, according to Reuters data.
New Zealand Oil & Gas (NZX: NZO ) rose 2.6% to $1.59 as crude oil gained for a second day, reaching US$70.66 a barrel in Singapore. Medical supplies distributor EBOS Group (NZX: EBO ) rose 2.9% to $5.25 and Guinness Peat Group (NZX: GPG ) gained 2.9% to 70 cents.
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