MARKET CLOSE: NZ stocks fall with drop in Japanese equities

MARKET CLOSE: New Zealand stocks fall as Japanese market tumbles; Tower paces decliners

By Jason Krupp

March 14 (BusinessDesk) - New Zealand stocks fell, as investors shunned higher yielding, or riskier, assets amid fears that the catastrophic disaster in Japan could sap recent momentum on global equity markets. Tower Ltd. paced decliners while New Zealand Refining Co. rose.

The NZX 50 Index fell 18.81 points, or 0.6%, to 3,364.02. Within the index, 30 shares fell, 12 rose, and eight were unchanged. Turnover was $109.3 million.

Japan's Nikkei 225 fell 6.3% in the first session time since the 9.0 magnitude earthquake and tsunami, even after the Bank of Japan provided US$146 billion of support to limit the impact on financial markets. Equity markets declined across Asia, with Australia's ASX 200 Index trading 0.8% lower and Hong Kong's Hang Seng falling 0.4%.

The disaster added momentum to an existing pull back in equity markets, with many investors taking it as an opportunity to take risk off the table, said
Paul Richardson, chief investment officer at BT Funds Management. "We still fundamentally have a bullish view on international shares from here, but the chance of it being straight up is unlikely," he said.

Tower, the general insurer controlled by Guinness Peat Group, fell 3.8% to $1.79, continuing a decline started on Friday when the company said its expenses will swell due to reinsurance and other costs related to the Christchurch earthquake.

Expenses could grow to as much as $20 million this year, denting profit, while Japan's devastation is likely to drive up reinsurance costs further.

"Their expose is as bad as any other insurance company, but catastrophe insurance does have a cap on it in terms of events and exposure," said Richardson. "It is claims exposure which drives those numbers and they are probably going to have a lot."

Air New Zealand, the national carrier, fell 1.7% to $1.19. The airline said last week it will raise fares in response to rising fuel costs. Japan's quake may dent demand for flights from the North Pacific nation.

AMP NZ Office Ltd., the office property investor, fell 1.2% to 81 cents after it lowered its 2012 earnings guidance on the back of rising debt costs, changes in tax rules, and a rent review.

The company said it expects 2012 earnings of between 5.1 cents per share and 5.4 cents, the equivalent of $50.9 million to $53.8 million.

That would reflect a fall in profit of as much as 16%, with this year’s earnings forecast to be between 5.9 cents a share and 6.1 cents a share.
New Zealand Refining Co., the country's only oil refinery, rose 3.7% to $5.08, leading gainers on the NZX 50.

Demand for refining capacity is expected to increase after a number of the processing sites in Japan - the world's third biggest importer of crude oil - were shutdown.

That comes after NZ Refining already reported that refining margins were on the rise, having averaged US$6.17 a barrel in the year ended Dec. 31, ahead of a projected $6.06 per barrel.

Cavalier Corp., the listed carpet maker, fell 2.9% to $3.30, after reports that the price per kilogram of scoured wool has jumped 50% in the past six months.

(BusinessDesk)

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