NZ stocks: Sharemarket falls to six-month lows

12.15 pm

The New Zealand sharemarket headed off into a new six-month low this morning as the top 40 index dropped 2 per cent.

Air New Zealand shares continued their freefall although they stabilised late morning.

Telecom's 12c fall to 460 - an eight-month low - led the stock exchange indexes down, with the market heavyweight squashed by big falls in the United States on Friday.

On Wall Street, the broad Standard & Poor's 500 index slumped to its lowest level in almost three years, after a jump in the US jobless rate to a four-year high blindsided investors already reeling from a steady diet of poor corporate earnings.

In New Zealand, the NZSE-40 capital index dropped 39.88 points to 1940.72 by 11.30am on light turnover of $23.8 million.

Topping volume was Auckland Airport's $3 million worth of shares traded. It was down 5c to 365. Brett Wilkinson of DF Mainland said the New Zealand arket was a victim of negative sentiment about cash-strapped Air New Zealand, whose stocks fell to fresh all time lows.

The residents only A shares fell 11 per cent, 8 cents to 62 cents but later recovered to 64 cents , while the freely tradeable B shares fell 8.6 per cent, 7 cents to 74 cents.

Both classes of shares have lost 45 per cent of their value in the last month while the Bs have lost 70 per cent from their $2.43 price at the start of the year and the As have lost 60 per cent from $1.58.

The spectre of receivership hung over Air NZ's Australian subsidiary Ansett this morning, with media on both sides of the Tasman speculating on the airline's inability to stump up with enough cash to staunch Ansett's losses of $A1.3 million ($NZ1.57 million) a day. A rescue package involving Brierley Investments, Singapore Airlines and the Government would not involve Ansett, the acting chairman Jim Farmer said.

Brierley Investments was square on 58c.

"The sentiment is totally negative," Mr Wilkinson said.

Other companies suffering big losses in line with the market fall were discount retailer The Warehouse, down 6c at 587 after a disappointing annual result on Friday; casino operator Sky City, down 25c at 1110; debt collector Baycorp, down 40c at 1220.

Forestry and biotechnology company Rubicon was down 5c at 67, with the bulk of its $60 million share buyback completed.

Fletcher Building was down 5c at 255, Westpac NZ lost 50c to 1430 and AMP was down 70c at 2200.

Carter Holt Harvey shed 7c at 162 after international ratings agency Moody's downgraded its short-term rating to Prime-3 from Prime-2 on Friday.

The outlook for the long-term rating remained negative, reflecting Carter's weakened profitability and financial strength arising from the weak cash flow generation relative to the company's debt level, Moody's said.

Contact Energy was down 7c at 322, tech bellwether Advantage Group was down 1c at 45, Independent Newspapers Ltd lost 5c to 330, and newly listed Wakefield Hospital was down 10c at 220.

Fisher & Paykel was one of the few to survive the blood on the floor, rising 10c to 1390.

There were 74 falls and just 8 rises among the 111 stocks traded.

On Friday, the Dow Jones industrial average slumped 234.99 points, or 2.39 per cent, to 9605.85 and the tech-rich Nasdaq Composite Index fell 17.94 points, or 1.05 per cent, to 1687.70.

- NZPA