MARKET CLOSE: NZ stocks fall as Fletcher continues slide

MARKET CLOSE: NZ stocks fall as Fletcher continues slide; Telecom gains

Nov. 22 (BusinessDesk)- New Zealand shares fell, reflecting a continued slide in the price of Fletcher Building, the construction company weathering a downturn in residential building in Australasia. Telecom rose ahead of separate trading for its spun-off Chorus unit this week.

The NZX 50 fell 4.291 points, or 0.1 percent, to 3252.266. Within the index, 26 shares fell , eight rose and 16 were unchanged. Turnover was $93.6 million.

Brokers said the local bourse proved relatively resilient in the face of a sell-off in US and European equity markets amid reports a inter-party committee of the US Congress has failed to reach accord on US$1.2 trillion of budget cuts.

The kiwi dollar tumbled to an eight-month low, making New Zealand assets look relatively more attractive to overseas investors.

"The kiwi has fallen a reasonable amount in the last few weeks, so there is a bit of bargain hunting going on,” said Grant Williamson, a director at brokerage Hamilton Hindin Greene. That's helped underpin the NZX 50 to "buck the trend we are seeing overseas."

Fletcher fell 1.2 percent to $5.93 and has shed a quarter of its market value since it gave a profit warning in early October, saying first-half profit would fall 10 percent and full-year earnings growth would stall.

“Investors are saying in the short term it is not turning around earnings,” Williamson said. Building and construction "has been hit harder than most”.

Telecom rose 1.6 percent to $2.52 as the company comes under increased focus ahead of the debut of its Chorus unit as a separately traded stock.

The Chorus stock has already traded on the ASX on a deferred basis, falling 2.2 percent to A$2.25, while Telecom's ASX shares rose 1.4 percent to $1.48, making a combined value of A$3.73.

“Analysts are researching it more in depth – creating interest in the stock,” Williamson said.

Tower, the insurer that Guinness Peat Group is looking to sell down its stake in, rose 2.1 percent to $1.49 amid reports its Christchurch-based rival AMI is close to finding committed capital after being forced into a government bailout this year. One possibility was to be acquired by a rival such as Tower, Australia's Suncorp or IAG.

GPG rose 0.8 percent to 62.5 cents.

It is “no secret that Tower is looking for acquisitions” - it has a strong balance sheet, Williamson said.

Cavalier, the carpet maker that is part of a group trying to create a wool scouring monopoly in New Zealand, was the biggest decliner on the NZX 50, falling 7.5 percent to $2.22.

Rakon, which makes components for navigation systems and smart phones, fell 3.3 percent to 58 cents.

(BusinessDesk)

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