MARKET CLOSE: NZ stocks fall in third straight day

MARKET CLOSE: NZ stocks fall in third straight day as global fears sap upbeat sentiment

By Jason Krupp

July 19 (BusinessDesk) – New Zealand stocks fell for their third straight session, following Asian markets lower as weaker-than-expected sales in U.S. earnings stirred concerns over the global economic recovery. Steel & Tube Holdings Ltd., New Zealand Oil & Gas Ltd. and New Zealand Refining Company Ltd. paced decliners on the day.

The NZX 50 closed 0.7% down, or 21.2 points, to 2,964.6. Within the index 30 stocks fell, nine rose and 11 remained unchanged. Turnover on the day was $36.1 million.

Japan’s Nikkei was last trading 2.9% down at 9408.4, Hong Kong Hang Seng Index was 1% down at 20052.4 and Singapore’s Strait Times Index was 0.1% down at 2953.7.

“Right now domestic data is looking better than global data but offshore markets are setting the theme and we are pretty much following them although with lower beta,” said Paul Robertshawe, who helps manage $220 million for Tower Asset Management Ltd. “Domestically the focus is on outlook statements, and how companies say they are going to perform as they go into their peak period to Christmas. Given the proximity to reporting season most of the companies that have negative surprises in store would have announced them already.”

Steel & Tube, the steel fabrication and processing company, led decliners with shares down 5.8% to $2.10. NZ Refining, which operates an oil refinery near Whangarei, fell 3.2% to $3.29.

NZ Oil & Gas fell 3.2% to $1.21 after the company announced that the second of two exploration wells on the highly prospective Tui oil and gas zone had failed to find any evidence of hydrocarbons. The company owns a 12.5% stake in the field.

“The rumours that the Tui well was dry started surfacing late last week, so the announcement wasn’t all that surprising,” said Robertshawe. “However the stock is definitely down on the news, as most of the company’s growth prospects will only come online in the long-term, and for an exploration company it is just lacking real fizzle right now.”

Pan Pacific Petroleum NL, the only other New Zealand based company with a stake in the Tui oil field, fell 5% to 19 cents on the NZSX.

Restaurant Brands New Zealand Ltd. fell 2.6% to $2.27, Fisher & Paykel Healthcare Ltd., the manufacturer of ventilators and breathing devices, fell 1.7% to $2.97, and Auckland International Airport Ltd. fell 1.6% to 1.91.

Cavalier Corp., the only listed carpet-maker on the index, fell 1.6% to $2.46. Robertshawe said the market is looking at all companies with large domestic property holdings cautiously in light of the government’s changes to tax and depreciation, “even well-run ones like Cavalier”.

New Zealand Farming Systems Uruguay Ltd., the South American dairy farm operator, surged 29% to 53 cents, after Singapore’s Olam International said it wanted to acquire shares in the company it didn’t already own at 55 cents apiece. Olam, which manages a globally integrated supply chain of food an agricultural products, has entered into an agreement to purchase PGG Wrightson's 11.5% stake in NZFSU, subject to regulatory approval, and is making a full takeover offer on the same terms.

Shares in Wrightson, the country’s biggest rural services company, rose 6.4% to 50 cents.

“This is a material deal for the company, which is trading at half of its book value, because the cash flow required to get it in an earnings positive state is just not there,” Robertshawe said. “It should be interesting to see if the deal gets recommended or if the price is too much of a discount.”

NZX Ltd., which operates the stock exchange, rose 3.5% to $1.50, whiteware manufacturer Fisher & Paykel Appliances Ltd. rose 1.9% to 54 cents, and ING Medical Properties Trust, hospital and medical facility property investor, rose 1.7% to $1.22.

Bright Dairy & Food Co., China’s third-biggest dairy company by volume, has agreed to buy a majority stake in Canterbury milk processor Synlait Milk Ltd. for $82 million.

Synlait Ltd., which abandoned a planned $150 million share sale last year due to a tepid response, will be a joint owner of its milk processing company in a joint venture with Bright Dairy, though it will keep and operate its farms through a separate company. The deal is Bright Dairy’s first investment in processing facilities outside China.

(BusinessDesk)

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