MARKET CLOSE: NZ shares tumble, led by Westpac

MARKET CLOSE: NZ shares tumble, led by Westpac, banks; KMD, PGW fall

May 5 (BusinessWire) – New Zealand shares fell, sending the NZX 50 Index down 1.5%, as doubts about Westpac Banking Corp.’s second-half earnings growth and an analyst downgrade weighed on lenders. Stocks sold off worldwide as Europe stares down a potentially contagious fiscal meltdown in Greece, with reports Spain is as bad.

The NZX 50 declined 49.20 to 3248.81, the first drop of that magnitude since early February to the lowest level since late March. Within the index, 39 stocks fell, just three rose and eight were unchanged. Turnover was $80.7 million.

Westpac, Australia’s No. 2 lender, dropped 4.6% to $33.40 on the NZX after announcing a 32% gain in first-half profit as bad debt charges shrank. Investors, though, focused on the weaker than expected margin and prospects for the second half.

Westpac “is a company with a fantastic record of over-achieving” though it is fair value currently and investors are concerned it may face an “earnings growth challenge” in the current six months, said Chris Weston, institutional dealer at IG Markets in Melbourne.

Citigroup cut Westpac to ‘hold’ from ‘buy’ in a note that said the bank may face short-term constraints on revenue because of high wholesale funding costs.

Australia & New Zealand Banking Group, which owns New Zealand’s biggest lending group, fell 4.4% to $30.80.

In Australia, the S&P/ASX 200 Index fell 1.4% to 4670, extending the global sell-off. Spanish Prime Minister Jose Luis Rodriguez Zapatero was forced to deny his country is next in line to need a bailout after media criticism of its lax fiscal restraint. Traders have speculated that Portugal is in the same camp.

“Greece is a big cloud of uncertainty – will there be contagion? The problem is no-one knows,” Weston said. For commodity currencies or stocks, though, the focus will be on China’s growth and the recovery of the U.S. economy, which is picking up, he said.

Port of Tauranga rose 0.6% to $6.96, one of the three gainers today. Fishing company Sanford Ltd., which is sensitive to currency fluctuations because it exports its catch, rose 0.5% to $4.30. The kiwi dollar tumbled about 1 U.S. cent overnight to trade recently at about 72 cents.

Ebos Group, the medical equipment distributor, rose 0.2% to $6.41.

Kathmandu Holdings, which went public in a float that saw private equity interests sell down their holdings, fell 3.9% to $2.20. The retailer reaffirmed its profit forecast for the year. Managing director Peter Halkett told a conference in Sydney that the company was on track to meet its prospectus forecast, though “much uncertainty exists in the short term.” The company expects to post earnings before interest and taxation of $50.9 million in 2010.

PGG Wrightson fell 3.6% to 53 cents as Alan McConnon stepped down as a director. His link was via his directorship of his family’s investment vehicle Aorangi Laboratories Ltd., which owned the biggest stake in Rural Portfolio Investments. The RPI investment vehicle, owned by Baird McConnon and Craig Norgate, is in receivership, leaving a question mark over the status of its 46.8 million Wrightson shares.

New Zealand Oil & Gas declined 3.2% to $1.51 and Pan Pacific Petroleum dropped 2.9% to 34 cents as the price of crude oil fell.
New York crude has shed more than 5% in the past two days as the greenback strengthened and amid signs of weaker Chinese demand.

(BusinessWire)

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