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Market Close: NZ stocks follow world lower, escape worst of rout

Thursday 20th November 2008

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New Zealand shares extended their slide, pushing the NZX 50 Index to the lowest in more than four years, as equities across Asia-Pacific followed Wall Street sharply lower.

The NZX 50 Index fell 2.3% to 2644.666, the lowest since June 2004. So far this month, NZ$2 billion has been sliced off the market value of the index, which reached NZ$30.6 billion today. Fisher & Paykel Appliances, Steel & Tube Holdings, Infratil, Michael Hill International, Pumpkin Patch and Skellerup Holdings all fell more than 5%.

Companies across the globe have been posting weaker earnings or predicting a downturn as the global economy falters. Figures today showed Japan’s exports tumbled 7.7% last month, the biggest decline since 2001.

Investors have grown more optimistic the financial crisis is under control and have now turned their focus to the economic outlook, said Stephen Walker, head of asset management at Goldman Sachs JBWere. “You’re looking for the next thing, so you’re looking at the economies and the outlook for them is pretty poor.”

F&P Appliances fell 8.8% to NZ$1.25. In the past month, the shares have outperformed the benchmark index, gaining about 4%. Two of seven analysts who follow the stock rate it a ‘buy,’ according to Reuters, two more say it will outperform. New Zealand’s largest maker of home appliances this month posted a first-half loss on costs to relocate factories overseas and waning sales in the U.S. and at home. It declined to make a profit forecast.

Steel & Tube Holdings, which supplies building materials such as reinforcing steel, fell 8% to NZ$2.70. Infratil, which owns airports, power and bus companies, declined 7.3% to NZ$1.66.

Pumpkin Patch fell 5.6% to 85 cents, its third daily tumble after chief executive Maurice Prendergast said 2009 earnings would weaken after an “extremely difficult” first quarter.

Air New Zealand, which yesterday announced plans to cut 200 workers because of a drop in demand, fell 2.3% to 87 cents.

Fletcher Building fell 3.9% to NZ$5.48 after U.S. Commerce Department figures showed housing starts and permit fell to record lows last month, suggestion the American housing recession will sap demand for the company’s steel roofing tiles and laminated board.

“We’re right in the second phase of the cycle, where firms are feeling the impact of the liquidity crunch and cost of credit,” said Mark Peterson, managing director at Direct Broking.

“It may well take six months, 12 months to get through that. I don’t think there’s going to be places that can hide from it,” he said.

The decline in the New Zealand market is lagging behind the slump in the bourses of other nations. The Dow Jones Industrial Average tumbled 5% and the Standard & Poor’s 500 Index dropped 6% in New York.

Australia’s S&P/ASX 200 Index was down 4.5% in late afternoon trading. Resource company BHP Billiton fell 9% to A$21.07, Rio Tinto dropped 12% to A$57.89 and Woodside Petroleum fell 8.8% to A$30.94.

Goldman Sachs JBWere’s Walker said the relative outperformance reflects the smaller portion of cyclical on the NZX, with a power company, Contact Energy, and a phone company, Telecom Corp., taking the top two slots in the NZX 50.

Telecom fell 1.7% to NZ$2.31 and Contact dropped 4.9% to NZ$6.80.


NZX Top 50
Last updated: 20/11/2008 5:08pm

AIA 1.64 -0.03
AIR 0.87 -0.02
AMP 6.10 +0.05
ANZ 15.50 -0.60
APN 3.24 0.00
APT 0.97 0.00
CAV 2.05 +0.04
CEN 6.80 -0.35
EBO 4.00 -0.20
FBU 5.48 -0.22
FPA 1.25 -0.12
FPH 3.08 -0.04
FRE 3.00 -0.05
GFF 1.80 0.00
GMT 1.01 -0.01
GPG 0.93 +0.01
HLG 2.23 0.00
IFT 1.66 -0.13
IMP 1.04 +0.01
ING 0.62 0.00
KIP 1.05 +0.01
LNN 10.00 +0.20
MFT 4.32 -0.13
MHI 0.58 -0.04
MVN 1.25 -0.05
NPX 4.75 -0.20
NZO 1.19 -0.01
NZR 6.26 +0.16
NZS 0.90 -0.04
NZX 5.80 -0.15
PFI 1.00 -0.04
PGW 1.52 0.00
POT 6.35 -0.25
PPL 0.85 -0.05
PRC 0.94 -0.03
RAK 1.00 -0.02
RYM 1.35 -0.03
SAN 5.30 -0.08
SKC 3.08 +0.03
SKL 0.75 -0.04
SKT 3.35 -0.13
STU 2.70 -0.24
TEL 2.31 -0.04
THL 0.72 -0.03
TLS 4.75 -0.09
TPW 7.05 -0.10
TWR 1.43 -0.05
VCT 1.93 -0.03
WBC 18.70 +0.30
WHS 3.65 -0.04

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