MARKET CLOSE: NZX50 falls amid recession fears

MARKET CLOSE: NZ stocks fall amid fears over global recovery, Michael Hill gains

By Jason Krupp

Aug. 25 (BusinessDesk) – New Zealand stocks fell for the first time in three sessions, as Australian banks ANZ Banking Group and Westpac Banking Corp. led the index lower amid heightened fears over a double-dip recession in the U.S.

The NZX 50 fell 18.6 points, or 0.6%, to 3006.1. Within the index 21 shares fell, eight rose and 21 were unchanged. Turnover was $71.5 million.

Stocks fell across the region, with Japan’s Nikkei down 1.8% to 8829.8, Hong Kong’s Hang Seng down 0.4% to 20570.2, Singapore’s Straits time down 0.1% to 2919.6 and Australia’s ASX 200 down 1.2% to 4328.4.

“We had a pretty weak lead overnight from international markets, and that has just continued into this part of the world, with the trend pretty consistent through Asia and Australia,” said Craig Brown, who helps manage $1.1 billion in equities for ING New Zealand Ltd. “Locally the low levels of liquidity have also exacerbated market movement and just turned it into a pretty soggy negative day.”

Pacing decliners on the day, Australian bank ANZ fell 2.8% to $27.90 on the NZX and dropped 1.6% to A$22.28 on the ASX. Trans-Tasman lender, Westpac, fell 2.2 to $26.55 on the NZX and fell 1.6% to A$21.10. Telecom Corp., New Zealand’s largest phone company, fell 2% to $1.99, breaking below the two dollar mark for the first time since Aug. 2.

The biggest gainer on the day was jewellery retailer Michael Hill International Ltd., which rose 4.6% to 68 cents after the Hill family said it’s looking to increase its holdings in the company to 50.1% from 48%. The move is waiting for shareholder approval, but ING’s Brown said the market seems to be looking on it “favourably”.

Emma Hill, a director at the company and spokesperson for the Hill family, said the family wants to take advantage of a depressed share price to take control.

"We've always wanted to buy a bigger stake in the company, and we think the stock is undervalued right now," she said. "It is just opportunistic with the right price coming at the right time."

NZ Farming Systems Uruguay Ltd., the South American diary operator currently being courted by three buyers, rose 2.9% to 72 cents, topping Olam International's sweetened takeover offer of 70 cents amid speculation Uruguay’s rival bidder Union Agriculture Group or a third, unnamed, group may push the bidding higher.

Skellerup Holdings Ltd., the technical polymer and vacuum pump manufacturer, rose 9.7% to a 22-month high 80 cents after the company posted a full-year profit that beat its guidance after a recovery in second-half trading and forecast increased earnings for 2011.

PGG Wrightson Ltd., the rural services company, fell 1.8% to 55 cents, NZ Oil & Gas Ltd., the mining and exploration company, fell 1.7% to $1.19 and financial services company Tower Ltd. fell 1.6% to $1.85.

Shares in Pike River Coal Ltd., the coal miner, were unchanged at 97 cents, after company announced that its annual net loss had widened to $39 million for the year ended June 30, from $13 million a year earlier, reflecting the continued development of its West Coast mine. The company burned through $47.5 million in cash in the year, up from $7 million the previous year.

Telstra Corp., the Australian telephone company, rose 1.9% to $3.75, Kiwi income Property trust, a property investor, rose 1.1% to 96 cents, and commercial real estate investor Property for Industry Ltd. rose 0.9% to $1.13.

(BusinessDesk)

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