NZ shares defy global sell-off, Telecom boosts index

By NZPA

Tuesday 28th November 2006

The New Zealand share market closed flat today, but defied a significant sell-off in global equity markets.

The benchmark NZX-50 index was up 0.9 points at 3832.55, on turnover of 29.5 million shares valued at $95.5 million. Falls outnumbered rises 85 to 33 among the 160 stocks traded.

"We really did put up a great showing in light of the negative sentiment we had to contend with emanating from those offshore equity markets, including those operating in the same time zone," said Barry Lindsay of First NZ Capital.

"We traded knowing that the Australian market was also weakening in the order of 1.3%, and Japan was down about 1%, and the rest of Asia falling similarly."

Giving the market a boost was Telecom's recovery on a better-than-expected parliamentary recommendation of a three-way operational and accounting split.

The committee stopped short of forcing structural separation that could have wiped hundreds of millions off the value of the telecommunications giant.

Telecom hit a low of $4.37 before recovering to close up 4c, at $4.51.

"It seems to be solely due to analysis of the select committee's recommendation on the Telecommunications Bill," Lindsay said.

"Because the recommendation did not include a full structural separation ... that was a better outcome than had been feared. Of course, it's only a recommendation at this stage."

Buyers also trickled into other top-10 stocks, with Fletcher Building up 2c to $9.86, Fisher & Paykel Healthcare 5c higher at $4.35, and Auckland Airport up a cent at $2.16.

Clothing retailer Hallenstein Glasson tumbled a further 14c, or 2.6%, to $5.26 in the wake of yesterday's profit warning ahead of the Christmas trading period.

Fellow retailer Briscoe Group fared better, up 3c to $1.75, although The Warehouse fell 3c to $6.68 and Pumpkin Patch was also down 3c, at $4.22.

Nuplex reversed an early rise to end down 10c at $7.20.

Motor maker Wellington Drive fell 9c to 48c after a $40 million deal with US investor Source Vortex, first announced in August, fell through.

WDT said it had arranged an alternative source of capital by placing 30 million shares at 40c to Citicorp, raising $12 million.

"It came as a surprise, and I guess it was somewhat inevitable that it would lose some of the gains it has enjoyed following the announcement of that Source Vortex deal," Lindsay said.

Australian shares fell 1.2% as investors booked profits on banking stocks and US-exposed companies like Westfield Group, while in Japan the Nikkei average dropped 1.1%.

Earlier on Wall Street, US stocks slid with the Nasdaq losing more than 2%, amid concern about Google Inc's valuation and doubts about holiday spending after a disappointing sales estimate from Wal-Mart.

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