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MARKET CLOSE: NZ shares dip amid outlook for flat earnings

Monday 18th January 2010

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New Zealand shares fell in light trading amid expectations companies will struggle to lift earnings this year and concern that consumers aren’t yet prepared to resume their spending habits.

The NZX 50 Index fell 10.84, or 0.3%, to 3247.10, the fifth decline in six sessions. Within the index, 14 stocks fell, 16 rose and 20 were unchanged. Turnover was $37.5 million.

Fletcher Building (NZX: FBU ) dropped 2.4% to $8.11 as figures showed home sales tumbled 18% in December from November to 4,975 properties sold, a level the Real Estate Institute described as “concerning.”

The Warehouse (NZX: WHS ) fell 1% to $3.98. Chief executive Ian Morrice said this month that steady sales growth expected through the peak Christmas period “didn’t materialise” and first-half earnings growth probably stalled. Lack of earnings growth may be a feature of 2010 for the New Zealand market, some investors say.

“The market here expects it to be flat earnings this year,” said Rickey Ward, equities manager at Tyndall Investment Management. That may be followed by “a massive rerating as global economies improve, for large EPS growth in 2011,” he said.

Trading is “lacking direction” with US markets closed on Monday for the Martin Luther King Jr. holiday.

Pyne Gould Corp (NZX: PGC ), the investment group planning to turn its Marac unit into a bank, sank 2% to 48 cents in its debut as a member of the NZX 50 today. It replaces Skellerup Holdings, which was unchanged at 48 cents.

Contact Energy (NZX: CEN ) fell 1.3% to $6.10 and OceanaGold (NZX: OGC ) climbed 1.7% to $2.39 after the mining company raised its reserves estimate for the third time in as many months.

The gold miner, whose shares have soared 510% in the past 12 months as the price of gold climbed, increased its mineral reserve inventory at Macraes by 259,000 ounces of gold, it said in a statement today. The additional reserves extend the life of the Otago facility to at least 2016, it said.

ANZ (NZX: ANZ ) gained 3.2% to $28.60 and Westpac (NZX: WBC ) rose 2% to $32.10 as Fitch Ratings Agency reaffirmed the benign outlook for the four pillars in a teleconference. Tim Roche, a director in Fitch’s financial institutions team, said while the banks still faced risks from bad loans, Australia’s resilient economy, and employment in particular, helped keep a positive outlook for the financial powerhouses across the Tasman.

Roche said he expects “more conservative liquidity requirements from regulators,” as the banks reduce their reliance on wholesale funding.

New Zealand Oil & Gas (NZX: NZO ) fell 0.6% to $2.29 and stock exchange operator NZX Ltd. Declined 0.9% to $2.29.

Tower (NZX: TWR ) fell 4.2% to $2.07, leading the NZX 50 lower today, while New Zealand Refining (NZX: NZR ) gained 4.3% to $3.92, to be the biggest gainer.

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