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MARKET CLOSE: NZ stocks fall, as US earnings season gets underway

Tuesday 13th July 2010

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New Zealand stocks fell for the first time in eight sessions, tracking Asian markets lower with all investors remaining cautious ahead of the key company reporting season in the US.  PGG Wrightson and NZ Farming Systems Uruguay paced the slide.

The NZX 50 fell 3.1 points, or 0.1%, to 3008.9. Within the index 24 stocks fell, 13 rose and 13 remained unchanged. Turnover was $86.3 million.

Japan’s Nikkei was last trading at 0.2% down at 9,528.3, Hong Kong’s Hang Seng Index was 0.1% down at 20454.8 and Singapore’s Strait Times Index was 0.2% weaker at 2920.7.

Ricky Ward, domestic equities manager at Tyndall Investment Management said markets were shrugging off early indications of better-than-expected company result from the US after aluminum producer Alcoa reported second-quarter earnings that topped analysts’ projections on the back of stronger metal prices.

“The data coming out is not conclusive that we are going to get a quick turnaround, and that uncertainty has created the market that we have at the moment, with light flows and a high level of caution,” Ward said. “We have just hit the start of reporting season in the States, and it may be a bit premature for people to speculate from one company in particular what the overall results will be.”

Wrightson (NZX: PGW ) fell 3.9% to 49 cents. The stock has come under pressure after the company announced last week that it is looking to extend the maturity of a listed bond that ends in October for another year after it was accepted into the government's extension to the retail deposit guarantee. Ward said the price drop was most likely due to profit taking.

NZ Farming Systems (NZX: NZS ) fell 4.6% to42 cents, pacing declines, NZX (NZX: NZX ) fell 1.9% to $1.57, and Fisher & Paykel Appliance (NZX: FPA ) fell 1.8% to 54 cents.

Shares in Telecom (NZX: TEL ) rose 0.5% to $1.96 as speculation swirls that the company is nearing the sale of its Australian subsidiary AAPT. Ward said sale has helped offset news that Telecom would incur $38 million more in tax expenses in 2010, following changes to New Zealand’s tax law stopped companies claiming depreciation on buildings.

Pyne Gould (NZX: PGC ) rose 2.6% to 40 cents, pacing gains on the NZX 50. Sky City (NZX: SKC ) rose 1.4% to $2.95 and Kiwi Income Property Trust (NZX: KIP ) rose 1.1% to 93 cents.

Contact Energy (NZX: CEN ) fell 0.3% to $5.80 %. The electricity supply and distribution company had earlier announced that it had won an $8 million contract to supply electricity to the New Zealand Defence Force. The contract is for three-years, with two further rights of renewal for a period of two years each.

Diligent Board Member Services (NZX: DIL ) a start-up software company, rose 1.6% to 64 cents after reporting second-quarter sales jumped 66% to US$1.92 million in what is traditionally a slow period. That took annualised licence fees – locked-in recurring revenues – to US$7.55 million compared with US$4.89 million at the end of the second quarter last year.

Shares in dual-listed APN News & Media (NZX: APN ) were unchanged at $2.43 after the company’s chief executive Brendan Hopkins announced that he is stepping down at the end of the year. Hopkins has led the Australasian media company for eight years.

The government-appointed statutory manager over Timaru millionaire Allan Hubbard and part of his empire has frozen the assets of another investment vehicle, saying it has “added another complexity” to the investigation.

Three weeks after their appointment, Richard Simpson and Trevor Thornton of Grant Thornton have frozen Hubbard Management Funds, another Hubbard-controlled investment vehicle, which shares some investors with Aorangi Securities, according to the first statutory managers’ report.

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