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MARKET CLOSE: NZ stocks fall as Farming Systems offer ends

Tuesday 28th September 2010

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New Zealand stocks fell, led by NZ Farming Systems after Singaporean commodities company Olam International snapped up almost 78% of the company in a successful takeover offer.

The NZX 50 Index fell 8.9 points, or 0.3%, to 3,230.2. Within the index, 25 stocks fell, 13 rose and 12 were unchanged. Turnover was $79.5 million.

NZ Farming Systems (NZX: NZS ) fell 4.4% to 66 cents. The company’s shares traded in the 40 cents range for much of the year before Olam’s initial buyout offer of 55 cents a share in mid-July, which was lifted three weeks later to 70 cents a share.

“The deal is done, so there is nothing to support the price,” said Rickey Ward, domestic equities manager at Tyndall Investment Management.

Steel & Tube (NZX: STU ) fell 2.4% to $2.40, Pyne Gould (NZX: PGC ), fell 2.4% to 41 cents, and Sky TV (NZX: SKT ) fell 1.9% to $5.09.

Contact Energy (NZX: CEN ) fell 1.7% to $5.71. The company released its annual report today, which showed that managing director, David Baldwin, saw his cash bonus bounce back to the second highest since his appointment in 2006, despite the electricity generator-retailer showing the second-lowest return on equity in its sector.

Contact’s annual report for the year to June 30, 2010, also shows the utility is paying 297 of its approximately 1,050 staff more than $100,000 a year, up from 115 in the 12 months to June 2007, Baldwin’s first full year with the company.

NZ Oil & Gas (NZX: NZO ) fell 1.6% to $1.27 after the company announced it is set to issue an estimated 5.2 million new shares under its dividend reinvestment plan.

NZOG, which paid a 5 cents a share annual dividend, gave shareholders the option to reinvest their dividends in new shares at a 2.5% discount to the weighted average sale price for shares sold on the NZX on each of the first five business days immediately following the dividend record date.

Telecom (NZX: TEL ) was unchanged at $2.04 after the Commerce Commission said it want to stick to price regulation over mobile termination rates as it prepares to hold a workshop on the issue next week.

The regulator says the non-price terms of existing commercial interconnection agreements don’t need to be brought under its remit, and it will let them stand unless the industry provides “compelling” reasons for them to be reined in.

The NZSX Consumer Index rose 1.2% to 1,675.4 points today, as Kathmandu (NZX: KMD ) rose 3.9% to $1.89, pacing gainers on the NZX 50. Ward said the stock has appeared to be undervalued of late when compared to other listed retailers, and the company’s positive had allowed investors to take a long-term approach to the company.

Michael Hill (NZX: MHI ) rose 2.9% to 72 cents, Hallenstein Glasson (NZX: HLG ) rose 2.6% to $4.35, and children’s clothing retailer Pumpkin Patch (NZX: PPL ) was unchanged at $1.93.

Fletcher Building (NZX: FBU ) rose 0.7% to $8.59, ahead of the release of building consent numbers for August.

“It is important to keep an eye on these numbers for an indication on the health of the economy and to justify Fletcher Building’s share rally,” Ward said. “If the numbers are poor it is going to raise questions why the stock has rallied over a dollar in the last month.”

NZ Refining (NZX: NZR ) rose 2.5% to $3.69, and Fisher & Paykel Appliances (NZX: FPH ) was unchanged at 58 cents. The company earlier said its Chinese cornerstone shareholder which owns a fifth of the whiteware maker, is not looking to raise its stake.

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