MARKET CLOSE: NZ stocks fall; Telstra drops

MARKET CLOSE: New Zealand stocks fall; Telstra drops on slump in business market

By Jason Krupp

Aug 12 (BusinessDesk) – New Zealand stocks fell for a third straight day, broadsided overnight by global markets tumbling precipitously after already-spooked investors fled equities on fears economic growth and corporate earnings will stall. Telstra Corp. led declines after reporting a slump in its business market.

The NZX 50 fell 29.1 points, or 1%, to 3006.9. Within the index, 33 stocks fell, three rose and 14 unchanged. Turnover was $55.9 million.

Overnight the Federal Reserve sent jitters through the global investment community after its expressed concerns about the pace of recovery in U.S. output and employment, which has slowed in recent months.

Asian stocks traded lower across the board, with Japan’s Nikkei 225 down 1.3% to 9169, Hong Kong’s Hang Seng down 1.5% to 20977, Singapore’s Straits Times Index down 1% to 2920, and South Korea’s KOSPI down 1% to 1740.

“The announcement has certainly taken some of the wind out of the sails of the global recovery, with other countries also downgrading their economic outlook,” said Keith Poore, head of investment strategy for AXA Global Investors. “The recovery is still in place though, especially if you look at U.S. corporate earnings as the backdrop, up 50% on last year, with sales up 10%.”

Telstra, the dual-listed telecommunications company, fell 9.7% to $3.73 after it posted weaker annual profit. Earnings before interest, taxation, depreciation and amortisation of $157 million in the year ended June 30, compared to $159 million a year ago.

Telecom Corp., New Zealand’s largest telephone company, fell 1.5% to $2.01.

Kathmandu Holdings, the outdoor clothing retailer, fell 4.7% to $1.61, New Zealand Oil & Gas Ltd., the energy exploration and mining company, fell 3.2% to $1.20 and financial services company Pyne Gould Corp. fell 2.4% to 40 cents.

Shares in Steel & Tube Holdings, which supplies steel products to the construction industry, fell 3.2% to $2.15 after it posted a 78% slump in full-year profit as a lacklustre construction sector weighed on demand. The Wellington-based company made a net profit of $5.7 million, or 6.5 cents per share, in the year ended June 30, compared to $26.1 million, or 29.6 cents, a year earlier.

Furthermore, the manufacturing sector looks set to face a grim outlook, after data showed new orders have taken a steep dive in July, dropping almost 10 index points from June to 47.6.

The BNZ-Business NZ Performance of Manufacturing Index provides an early indicator of activity levels, with a reading above 50 indicating expansion, below 50 a contraction.

Nuplex Industries Ltd., the industrial resin and chemical manufacturer, fell 2% to $2.94, Fisher & Paykel Appliances Holdings, the whiteware maker, fell 1.96% to 50 cents, while shares Cavalier Corp., New Zealand’s only listed carpet maker, were unchanged at $2.59. Crystal oscillator manufacturer, Rakon Ltd., fell 1.9% to 1.6.

Turners & Growers Ltd., the Auckland-based fruit marketer and distributor, fell 3.5% to $1.40 after it reported a 10% increase in underlying earnings to $11.8 million for the first-half of its financial year, short of analysts’ expectations.

Shares in Kiwi Income Property Trust, the diversified office and retail property investor, were unchanged at 94 cents after the trust told investors at its AGM that it is well positioned to capitalise on New Zealand’s recovery -when it happens.

It said it sees early signs of this turnaround already, with property values stemming their losses to 0.5% in the last six months versus 14% over the last two years, and expects the consumer space to lead the charge as unemployment falls.

Michael Hill International Ltd., the dual-listed jewellery manufacturer and retailer, rose 1.5% to 67 cents, leading gains on the day. ING Property Trust, which invests in and manages healthcare related properties, rose 0.8% to $1.24, and Contact Energy Ltd., the third largest stock on the NZX, rose 0.2% to %5.70.

(BusinessDesk)

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