MARKET CLOSE: NZ stocks fall on European debt, China concerns

Wednesday 17th November 2010

New Zealand stocks fell for a second day, as investor risk appetite waned on concerns over Europe's sovereign debt and policy tightening in China continued to stalk global markets.

Pyne Gould paced decliners, while Vector led gains.

The NZX 50 Index fell 25.75 points, or 0.78%, to 3,289.3. Within the index, 35 stocks fell, five rose and 10 were unchanged. Turnover was $108.1 million. In Asia, stocks markets traded mostly lower after reports that China was considering implementing food price controls and limits on commodity speculation to rein in inflation, while in Europe the continued standoff between Ireland and euro zone member over a bail out continued to fuel uncertainty in the market. In afternoon trade the Shanghai Composite Index fell 1.1% to 1,178.34.

"One of the further ramifications of those two developments is the impact that this has on currencies and in turn commodities, remembering that the theme of the falling US dollar and rising commodities underpinned much of the activity that went on recently," said Angus Gluskie, a director at White Funds Management in Sydney.

Pyne Gould (NZX: PGC ) fell 4.8% to 40 cents after shedding its 1.5 cents-a-share special dividend. The financial services company said this week it plans to distribute most of its stake in the proposed South Island bank if the merger between Marac, CBS Canterbury and Southern Cross Building Society proceeds.

PGG Wrightson (NZX: PGW ) fell 4% to 48 cents, and Kathmandu (NZX: KMD ) fell 3.7% to $1.57 after going ex-dividend.

Telecom (NZX: TEL ) fell 4.1% to $2.11. The company today said it cancelled its dividend reinvestment scheme for the first quarter dividend because of share price uncertainty created by the delayed announcement of preferred partners for the government's ultra-fast broadband project.

The potential for the imminently expected government UFB announcement to move the share price has prompted the cautious approach, a Telecom spokesman said.

Vector (NZX: VCT ) rose 1.2% to $2.54, pacing gainers on the main board. Goodman Property Trust (NZX: GPT ) rose 1% to 98 cents, Mainfreight (NZX: MFT ) rose 0.5% to $7.40, and New Zealand Refining Company (NZX: NZR ) rose 0.3% to $3.76.

Fletcher Building (NZX: FBU ) rose 0.9% to $8.01 after chairman Ralph Waters told shareholders at their annual meeting that rebuilding Canterbury after the earthquake and the government programme to fix leaky homes will be the impetus for growth in the construction industry.

Profit in 2011 may be around $357 million, matching the average of analyst forecasts, from $301 million excluding a one-time tax charge last year.

Windflow Technology (NZX: WTL ) fell 3.4% to 85 cents, after it said it saw fat margins both for itself and for the Scottish farmers it is targeting under a British government subsidy scheme to encourage small-scale wind generation.

The emergence of the British scheme has thrown Windflow both a lifeline, as it has no forward orders beyond its sole customer, Te Rere Hau windfarm, where construction is almost complete, and a large, previously unexpected sales opportunity.

Dorchester Pacific (NZX: DPC ) , which kept receivers at bay by convincing investors to swap their debt securities for a grab-bag of new securities, was unchanged at 11 cents, after it posted a first-half profit after making fair-value adjustments.

Profit was $15.7 million in the six months ended September 30, from a loss of $8.5 million a year earlier, the company said in a statement. Operating revenue tripled to $33.8 million, with $29 million coming from an item described as "Fair value adjustment - capital raising & capital reconstruction."

Businesswire.co.nz

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