NZ stocks: Shares close lower but bounce off session lows

The sharemarket closed down 0.6 per cent today, but recovered well from what at mid-session looked like a repeat of yesterday's 1.4 per cent slide.

Yesterday's surprise rate hike and institutional selling ahead of the $100 million Air New Zealand shares sale weighed on the market initially.

"We had quite a good sell off and I think it sort of fed on itself this morning," said Forsyth Barr Frater Williams broker Alan Wills.

But the recovery came because " some of these stocks fell quite hard and some people took advantage of buying at levels that they found quite attractive".

Market leader Telecom bounced 11c off its low, closing 7c higher at 566. People are expecting it to produce strong quarterly earnings when it announces its result next week. There was very healthy turnover of 13.9 million worth $77.7 million.

The benchmark NZSX-50 gross index, at one stage down 27 points, closed down 14.37 points at 2471.51. The NZSX-40 capital index ended down 0.8 per cent, or 19.22 points, at 2287.17.

Very heavy market turnover of 284 million shares worth $241 million was inflated by the $102 million of Air New Zealand shares sold.

BIL International's sale of its 7.8 per cent stake went off at 42c/share, a 14 per cent discount to the previous close. The stock closed down 6c at 43c while BIL rose 1c to 68c after pocketing $96m from the sale.

Mr Wills said that while there were a lot more Air NZ shareholders and increased liquidity, his firm had downgraded its valuation from 46c to 37c on concerns about earnings as a result of increased competition.

Contact Energy fell 12c to 548. After the market closed, director and Edison Mission chief executive Tom MCDaniel announced his resignation. He said he was too busy with restructing Edison, which may be selling its 51 per cent Contact stake as part of a debt reduction programme.

Fletcher Forests fell 3c to 136 after news that Kiwi Forests Group had withdrawn from the purchase of the Tarawera forestry because it couldn't finance the $165m purchase. Unless another buyer can be found, the planned capital return to shareholders will be cut to 88.75cps from 120c.

"It's another hiccup in what has been a lot of difficulty in resolving this Fletcher Forest issue," Mr Wills said.

Two interest rate-sensitive stocks to suffer today as a result of the rate hike were Fletcher Building, down 9c to 395, and The Warehouse, down 2c to 511. The rate cut is seen crimping household spending and the building industry.

AMP continued its southward trend following National Australia Bank's withdrawal as a suitor. It dropped another 8c to 512,

Some exporters had a rough day despite the kiwi dollar's near one US cent fall. Fisher & Paykel Healthcare fell 10c to 1210, Cavalier fell 10c to 530 and Sanford fell 2c to 544.

Another exporter, Carter Holt Harvey fell 10c to 192 after its result yesterday which Mr Wills said left "lingering concerns".

"The wind was knocked out of Carters' sails a little bit yesterday by them not making any comment on the tissue sale and playing down the prospect of a capital return," said Goldman Sachs JB Were institutional adviser Joe Gallagher.

"Some of the speculators might just be coming out of that market now," he said.

TrustPower, which yesterday posted a "stunning" result, saying it had lifted its net profit for the nine months to December 2003 by 25.6 per cent to $52.7 million, closed up 4c to 689.

The company also proposed a capital return of about $85 million to shareholders in the first quarter of 2004/5 financial year.

"The market will definitely be in upgrade mode over the next few days you would have thought based on that result," Mr Gallagher said.

Other movers on the upside included banks ANZ, 5c to 2015 and Westpac NZ, 16c to 1795; and retailers Hallenstein Glasson, 2c to 287, and Michael Hill International, 5c to 505.

Lion Nathan rose 13 to 678, NGC, 4c to 228, and Sky City rose 11c to 468.

On the downside were: Auckland Airport, 11c to 664, Independent Newspapers, 9c to 482, and Ryman, 4c to 221.

In all 61 stocks fell against 44 rises among the 145 traded.

- NZPA