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MARKET CLOSE: NZ shares extend slide to 3-month low; WBC, PGW, THL fall

Thursday 20th May 2010

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New Zealand shares extended their slide for a fifth day as concern about contagion from Europe’s debt crisis and potential moves by China to cool its economy continued to weigh on equities. Westpac led financials lower.

The NZX 50 Index fell 10.46, or 0.3%, to 3111.41, the lowest since February 19. Within the index, 21 stocks fell, 20 rose and eight were unchanged. Turnover of $102 million was swelled by trading in Fletcher Building and Telecom.

Stocks fell across Asia today, with Australia’s S&P/ASX 200 declining 1.3% and Hong Kong’s Hang Seng slipping 0.5%. Japan’s Nikkei 225 Index fell 1.4% after figures showed the world’s second-largest economy grew at a lower-than-expected annual pace of 4.9% in the first quarter.Helping rattle markets was Germany’s move to push back against speculators betting against its assets, a move that reportedly surprised other nations in the euro zone.

“We’re in a bit of a crisis of confidence,” said Guy Elliffe, who manages $1.2 billion of New Zealand equities at AMP Capital Investors in Wellington. Investors are seeing volatility “they have not experienced for some quarters.”

Elliffe said the two issues driving weaker sentiment were fear of European contagion and policy risk, with China trying to slow its growth. “The underlying economic numbers are still pretty sound.”

Westpac (NZX: WBC ) fell 5.4% to $28 and ANZ (NZX: ANZ ) dropped 3.3% to $25.88, pacing declines in lenders on the ASX.

Kathmandu (NZX: KMD ) fell 5.9% to $1.92 after Finance Minister Bill English confirmed in his 2010 budget that goods and services tax will rise to 15% from 12.5%. The Treasury said in the Fiscal and Economic Update that consumer spending, particularly on durable goods, may increase ahead of the GST hike on October 1.

Warehouse (NZX: WHS ) rose 1.7% to $3.60.

Michael Hill (NZX: MHI ) rose 1.4% to 71 cents and Pumpkin Patch (NZX: PPL ) climbed 1.4% to $2.14. Both retailers get sales in Australia and the kiwi dollar today climbed to a 7-month high against its Australian counterpart after today’s budget.

Fletcher Building (NZX: FBU ) fell 0.7% to $8.06 and Telecom (NZX: TEL ) was unchanged at $2.05, near the lowest since the early 1990s amid concern its market share may be eroded by the government’s broadband rollout.

“Investors are trying to assess the outlook for the company (Telecom), which is continuing to be challenging,” Elliffe said. “It is hard to assess the value of the company.”  

Pan Pacific Petroleum (NZX: PPP ) shed 9.7% to 28 cents, the lowest level since December 2008. The company said today that the Tui SW-2 well has reached a depth of 1,507 metres, after the Tui SW-1 exploration well had to be abandoned last week. Pan Pacific owns 10% of PMP 38158, which contains the Tui South West prospect.

New Zealand Oil & Gas (NZX: NZO ) fell 2.8% to $1.41.

Briscoes (NZX: BRG ) the homeware and Rebel Sport store operator, rose 3% to $1.32 after managing director Rod Duke told shareholders at its annual meeting that the retailer remains in a strong financial position. Briscoe is keen to expand its key homewares and sporting goods businesses as well as expand into new geographical areas, he said.

Kiwi Income Property Trust (NZX: KIP ) fell 1% to 95 cents after the property investor posted a full-year loss of $12.4 million, reflecting a reduction in the value of its portfolio as a result of the world-wide decline in property prices. Still, the trust said it would distribute as forecast a full-year payment of 7.5 cents a unit to its holders.

PGG Wrightson, (NZX: PGW ) fell 3.6% to 54 cents and Pyne Gould (NZX: PGG ), the owner of Marac finance, fell 2.2% to 44 cents.

Property for Industry (NZX: PFI ) led gainers on the NZX 50 today, climbing 3.5% to $1.17. New Zealand Refining (NZX: NZR ) rose 2.4% to $3.40.

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