NZ Oil & Gas, Contact lead NZ shares down

Matt McCarten. Photo / Chris Loufte

New Zealand shares fell for a second day, led by NZ Oil & Gas, as investors adjusted their valuations to take account of smaller Tui reserves. Contact Energy declined on signs intense rivalry for customers is prompting defections driven by discount offers.

The NZX 50 Index fell 11.53, or 0.3%, to 3416.62. Within the index, 25 shares fell, 10 rose and 15 were unchanged. Turnover was $81 million, below the recent average.

The weight of decline in stocks such as NZ Oil & Gas and Contact, the biggest utility on the benchmark index, meant the NZX was one of the few bourses in Asia to shed value today. U.S. dollar assets sold off after speeches from the U.S. president and House Speaker exchanged speeches that gave little sign of progress on lifting the U.S. debt ceiling.

"People are sitting back waiting to get some resolution to some of these macro issues," said Craig Brown, who helps manage $1 billion in Australasian equities at One Path in Auckland. "It's very hard to push the button and get too carried away in buying stuff with this amount of uncertainty."

NZ Oil & Gas dropped 4.1% to 70 cents, adding to a 13% tumble yesterday and reaching a seven-year low. AWE, the Australian operator of the Tui field, yesterday cut its estimate of probably reserves, denting the value the New Zealand company's 12.5% interest in the field.

"There's not a lot of short-term things to drive that stock much higher," Brown said. "One of its main sources of cash has a shorter lifespan than thought and the chief executive is leaving at the end of the year."

Goodman Fielder, the Australian food manufacturer, fell 4.2% to $1.13 near the close. The stock is rated a 'hold' by seven of 12 analysts who follow the stock, according to Reuters data.

Telecom Corp. fell 0.8% to $2.62 after announcing more details of how it will allocate assets between its two halves when it splits as its part of the deal to win the lion's share of the government's broadband roll out.

One Path's Brown said there's still not enough published detail to make an accurate valuation of the parts.

"The devil is in the details, when the scheme of arrangement comes out," he said. There were some unknowns such as the true separation costs.

Contact fell 2.7% to $5.15 after releasing operating figures that showed the electricity retailer shed a further 7,500 electricity customers to 447,000 last month, taking the annual decline to 30,000. The June decline marked State-owned Genesis Energy leapfrogging Contact as having the biggest client base.

Power companies have been going door-to-door offering to undercut incumbent utilities, resulting in shifting loyalties and price cutting.

Fisher & Paykel Healthcare Corp. climbed 3.2% to $2.55, even as the New Zealand dollar rose to a new post-float high of around 87 U.S. cents, denting the value of U.S. dollar sales.

Brown said the stock has under-performed recently and was climbing back on that.