NZ stocks: Telecom seen cheap around 5-year lows

In a directionless Monday market, there were plenty of sellers in Telecom, which hit five-year lows, kicking the key top-40 index down for the start of the week.

Richard Burton, of Forsyth Barr Frater Williams, said the New Zealand market was out of synch with markets overseas as Wall Street made gains for the third day in a row, giving the Australian market a boost.

"Also they paid a lot of money for assets in Australia with cash - at the top of the bull market they bought AAPT with cash rather than issuing shares," Mr Burton said. "But I think it's people's immediate view on earnings that's driving it, they're probably a bit oversold down here in my view.

"We are all expecting the US market to pick up towards the end of the year, so that will be the driving force for this market."

The NZSE-40 capital index closed down 12.68 points, or 0.62 per cent, at 2030.78 and the small companies' NZSE-SCI capital index gained 3.38 points to 5509.50.

Telecom, down 11c at $5.07, topped turnover with volume of $27.10 million, making up about one-third of the total 23.25 million stocks traded, valued at $67.51 million.

There was also reasonable turnover in appliance company Fisher & Paykel, which shed 20c to $13.00 to close off its highs on profit-taking.

Brewer Lion Nathan held up - gaining 10c to $5.52 - after the NZSE Market Surveillance Panel ruled that Lion's forced sell-down of a 19 per cent stake in Montana did not comply with the committee's requirements. The panel also extended the period in which Lion can sell its defaulter stake.

Simultaneous to selling, Lion has bid at $5.50 a share for an 11 per cent stake together with a secondary bid for the rest of Montana at $3.70 a share. Montana closed up 7c at $4.57.

Carter Holt Harvey, up 1c at $1.71, reports its first quarter earnings today, The result is expected to reveal a tough period for the country's largest forest owner.

In April, Carter announced a 17 per cent rise in net profit for the year ended March 31, but predicted difficult trading conditions for the first half of this year.

Discount retailer The Warehouse gained 3c to $5.40, Contact Energy rose 3c to $3.17, Richmond was up 9c at $2.50 and Fletcher Building gained 1c to $2.59. Fletcher spin-off Rubicon was up 4c at 76c ahead of its $60 million share buyback.

Casino operator Sky City lost 16c to $11.74, Telstra shed 13c to $6.52, Tower, which went ex-dividend 14c, lost 13c at $5.12, Tranz Rail lost 3c to $4.02, and UnitedNetworks, 15c at $8.50.

Sanford lost some of last week's gains, down 10c at $6.75, and INL was down 5c at $3.85.

Air New Zealand A shares were down 2c at $1.07 and the Bs lost 5c to $1.40 as investors awaited the outcome of the airline's petition to the Government to enable Singapore Airlines to increase its stake above 25 per cent.

Nufarm, down 11c at $3.70, announced on Friday that it would take a $A50 million ($63 million) one-time charge on its loss-making Canadian unit and expects profit to be below earlier expectations.

Nufarm, formerly Fernz, was listed in the NZSE's top 10 before moving its head office and primary listing to Melbourne in January last year. It is Australia's largest agricultural chemicals maker.

There were 63 falls and 36 rises of the 141 stocks traded.

- NZPA