Attack shakes investors

By STAFF REPORTERS and AGENCIES

Shockwaves from the United States' terrorist outrage rocked New Zealand investors yesterday, sending the sharemarket to an eight-month low and throwing doubts over at least two planned capital-raising moves.

Market leader Telecom plummeted 7.5 per cent to an eight-year low of $4.35 as overseas investors sold up.

Vending Machine operator Vending Technologies postponed its rights issue, while Briscoe Group, comprising the Briscoes and Rebel Sports chains, said it would wait before deciding whether to go ahead with a public float.

The New Zealand dollar gained ground at the expense of the US currency and Reserve Bank Governor Don Brash moved to calm fears, saying yesterday's events were not expected to disrupt New Zealand's banking system.

He said the bank was "monitoring developments" in the world economy.

The Reserve Bank next meets to discuss rates on October 2, and investors seemed to be factoring in a rate cut yesterday, with 90-day bill rates slashed from 5.83 per cent to 5.57 per cent.

Macquarie Bank senior analyst Arthur Lim said a saving grace for the New Zealand market was that it was not heavy on the type of stocks hardest hit around the world, such as airlines, insurance companies and banks.

"You are always going to get the first rush of emotion as people panic and sell out of stocks - that's a very natural thing to do, [but] we are also seeing more seasoned, longer-term investors taking the opportunities to pick up some of these stocks which they believe are good value and they believe are grossly oversold," he said.

UBS Warburg head of research sales Richard Leggat said investors wanted liquidity and security.

"In the medium term, i.e. after the first day or so, New Zealand might be a reasonably attractive place from a defensive perspective and the fact the economy here is a bit better than other places," he said.

Alex Sundakov, director of the Institute of Economic Research, said there was unlikely to be any significant long-term impact on the US or New Zealand economies.

"The negative impacts will be some loss of confidence in the short term and financial panic, which we've already seen," he said. "That's the usual financial market overreaction. I think once things settle down, we'll probably see the markets coming back to where they were before."

Alasdair Thompson, chief executive of the Employers & Manufacturers Association, said businesses expected financial markets to slump and the price of oil to soar.

While trade with the US and tourism would be hit, it was likely to recover by the end of the year.

"We're relatively optimistic about things but we also recognise that a terrorist attack of this magnitude does present risks to the world economy," he said.

The sharemarket opened an hour later than normal, partly out of respect for the tragedy in the US, and partly to allow investors to better assess the international situation.

Full coverage: Terror in America

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The fatal flights

Emergency telephone numbers for friends and family of victims

These numbers are valid for calls from within New Zealand, but may be overloaded at the moment.

United Airlines: 0168 1800 932 8555

American Airlines: 0168 1800 245 0999

NZ Ministry of Foreign Affairs and Trade: 0800 872 111

US Embassy in Wellington (recorded info): 04 472 2068

Online database for friends and family