NZSE seeks direction, Telecom under pressure

The New Zealand sharemarket continued to look for direction this morning, with light trading volumes all round.

Just 6.1 million shares had changed hands by 11am with a value of $19.4 million.

The benchmark NZSE-40 capital index was down 5.30 points to 2042.28.

Market leader Telecom led the way by turnover volume but its share price slipped 2c to 509 after the company's annual results on Tuesday.

It reported a drop in profit to $643 million on $783 million the previous year, and writeoffs of $192 million which were offset by a $245 million dividend from its half share in Southern Cross Cable Network Ltd.

"Telecom is still under a wee bit of pressure... I think a number of the larger investors have read into the results that there's not a lot of growth there at the moment," said Grant Williamson of Hamilton, Hindin and Greene.

"They obviously see that the valuation is lower than where the current price is."

Telecom's share price was getting "borderline" but on light volumes and Mr Williamson did not believe Telecom would lose much more support.

The other company being watched was Montana, up 10c at 475. Brokers said this reflected the market's anticipation of a possible bid from Lion Nathan higher than the $4.80 offered by Allied Domecq, Lion's rival in the Montana takeover battle.

Lion sunk 9c to 526 as it began a forced selldown of 19 per cent of its shares in Montana.

In other stocks, Steel and Tube was up 4c to 197 on a yield stock; Sky City was stable at 11.50, and Natural Gas was up 2c to 107 ahead of its results on August 20.

Mr Williamson said the market was expecting at least a $200 million writedown of Natural Gas assets, but sentiment was that the company would improve as it returned to its core activities.

Overall, he said the market continued to seek direction, and even Wall Street was providing little in the way of guidance.

Falls outnumbered the rises by 30 to 24 on 113 stocks traded.

- NZPA