KEY POINTS:
The sale by Qantas of its stake in Air New Zealand hit the stock hard yesterday as a wider fall in the market scared off buyers.
Overnight on Tuesday Qantas sold its 4.2 per cent stake - a legacy of plans for a code share arrangement in 2002. Broker Goldman Sachs JBWere placed the shares with a number of local and international institutions at $2.70 - 20c lower than Tuesday's close of $2.90.
With the stock having traded as high as $3.13 this month, the sell-off - which came as no surprise to industry analysts - may ordinarily have presented a buying opportunity.
Several analysts still have a target valuation of more than $3 on Air New Zealand and there is a perception that the airline is well placed to take advantage of improving conditions in the aviation industry globally.
But the Qantas sale precipitated further selling yesterday and the shares closed down 25c at $2.65.
The airline was most likely a victim of negative sentiment on the market, said Stephen Wright of ASB Securities.
Buyers were thin on the ground as the NZX-50 shed 1.16 per cent yesterday to close down nearly 50 points.
The NZX-50 has now shed almost 3 per cent since its close last Thursday - the last positive day.
It was following a negative trend set by Wall St and Asian markets, Wright said. But interest rates and the high dollar were also starting to weigh on local sentiment, he said.
The sell-off may still represent a buying opportunity, said Forsyth Barr aviation analyst Rob Mercer.
But people needed to be buying on fundamentals, not on short term price fluctuations, he said.
The stock is 77 per cent owned by the Government and that lack of liquidity can make it vulnerable to dramatic price movements.
Mercer believes Air NZ is in good shape to return capital to shareholders over the next few years.
