NZ stocks: Sharemarket continues slide in morning trade

12.35 pm

The New Zealand sharemarket opened lower today in fairly light trading and in line with more poor performances on world sharemarkets overnight.

All the major markets, with the exception of New York, closed with double or three-figure losses.

"Things are pretty quiet here at the moment," James Snell at Credit Suisse First Boston said.

The markets were still digesting the profit warning from telecom companies yesterday, including Australia's Telstra and Finland's Nokia, overnight, he said.

The market continued to slide during the morning and at 11am the NZSE-40 index stood at 2044.07 - down 10.71 points - or 0.52 per cent - and down from the opening 2048.49.

The NZSE-SCI capital index was 0.67 of a point - or 0.01 per cent - lower, at 5475.05 but up from an opening 5474.82.

Turnover at 11am was 12.17 million shares, worth $25.56 million and of the 115 shares traded, 30 rose but 34 fell.

Market heavyweight, Telecom - which has a 23 per cent weighting in the Top 40 index - was 13c lower at 545 on turnover of 1.62 million shares, worth almost $9 million and Telstra shed 27c to 745.

Yesterday investors bailed out of both stocks after Australia's Telstra issued a statement warning that full-year revenue growth would slow to about 3.00 per cent and earnings before interest and tax - EBIT - to 5.00 per cent.

That compared with the end of the first half in March, when Telstra reported a 25 per cent rise in net profit to $A2.6 billion ($NZ3.29 billion) - an Australian record.

Analysts said the forecast showed Telstra was no longer immune to the global downturn in the telecommunications' sector.

Fisher and Paykel rose 20c to 1145, on volume of 410,070 shares, worth $4.63 million, to continue its recent strong run.

It said yesterday it would not shy away from again complaining about the dumping of Asian-made whiteware - either here or in Australia.

Air NZ's domestic A shares were a cent lower at 109 and the freely-held B shares also lost a cent to 146.

Air New Zealand-Ansett chief executive, Gary Toomey, in Sydney yesterday, rejected a report that Ansett was about to post a $A400 million ($NZ500 million) loss for the year ending June 30.

Air New Zealand's 30 per cent owner, Brierley Investments, wants the Government to dismantle the company's A and B share structure.

Brierley Investments was a cent lower at 60.

Power company, Natural Gas Corp, lost a cent to 105. New Zealand should separate electricity retailing from generation to prevent companies accumulating too much market power, Natural Gas Corp's Australian boss John Barton said yesterday.

His calls for changes to the market structure came as NGC faced soaring wholesale prices with insufficient hedges to protect it.

Fletcher Challenge spin-off, Rubicon, gained a cent to 64.

Market newcomer Rubicon earlier in the week unveiled a $40 million plan to buy back stock in a bid to strengthen its under-performing share price.

It has been a market ugly duckling since its launch in March but it has won favour from investors for its plan to use the proceeds from the sale of its Brisbane bulk-fuel terminal to partly fund a buyback.

"It is good to see the Rubicon management trying to close the discount gap," a broker said.

Rubicon's net asset backing is about 90c a share.

Fletcher Building was steady at 236 and Forests was steady at 31.

Meat exporter Richmond shed 35c 270 but on light volume.

PPCS Ltd appears to have won the first round in the battle for control of the Hawke's Bay meat processor after majority Richmond shareholder, Active Equities, last night agreed to sell part of its stake to the South Island company.

Active Equities said it would sell 49 per cent of its subsidiary Hawke's Bay Meat to PPCS, based on a valuation of Richmond shares at $3.65.

Hawke's Bay Meat owns 14.66 million shares - around 36 per cent - of Richmond, which has been locked in a bidding war between PPCS and its rival, British meat company Bernard Matthews.

Both have offered to bid for a controlling 60 per cent stake in Richmond for between $3.10 and $3.65 per share.

Under last night's deal PPCS would double its stake in Richmond to 34 per cent from a previous 16.75 per cent.

Auckland International Airport gained a couple of cents to 358.

Lion Nathan lost 5c to 500, Montana was steady at 480, Pay TV operator Sky TV was 4c higher at 344 and part owner, Independent Newspapers was steady at 354.

Infratil was steady at 142 and wood-products' firm, Carter Holt Harvey, rose a cent to 177.

The Warehouse lost 5c to 575, Contact Energy shed a couple of cents to 292, Trans Tasman Properties was steady at 23, as was Waste Management at 390.

In other activity, drinks company Frucor was unchanged at 160, casino operator, Sky City rose 5c to 1040, financial-services' company Tower shed a couple of cents to 538, AMP rose 25c to 2535 and Baycorp was unchanged at 1235.

Stocks staged a dramatic late comeback on Wall Street on Tuesday, to erase steep losses after bargain-hunters swooped into the market to grab shares beaten down by a bleak profit forecast from Finland's Nokia.

The blue-chip Dow Jones average index of 30 industrials closed 26.29 points - or 0.24 per cent - higher, at 10,948.38, after a drop of more than 1.00 per cent.

The tech-rich Nasdaq composite index closed 0.83 of a point - or 0.04 per cent - lower, at 2169.95, after a drop of 3.00 per cent.

The broader, Standard and Poor's 500 composite index gained 1.46 points - or 0.12 per cent - to 1255.85.

- NZPA