NZ stocks: Air NZ sale and rate cut weigh sharemarket down

The New Zealand sharemarket eased further in morning trade today as yesterday's surprise rate hike by the Reserve Bank combined with the discounted sale of a hefty chunk of Air NZ weighed on the indices.

At 11.30am the benchmark NZSX-50 gross index was 19.13 points or 0.77 per cent lower at 2466.75, while the NZSX-40 capital index was 22.27 points or 0.96 per cent lower at 2284.13.

There were 26 rises and 43 falls on 116 stocks traded and turnover was a whopping $142.21 million, inflated by $36.96 million in Telecom and $98.39 million in Air NZ shares.

Goldman Sachs JB Were institutional adviser Joe Gallagher said the sale of BIL Ltd's 7.8 per cent stake in Air New Zealand in a 24-hour bookbuild by Goldman Sachs JB Were had strongly affected the market.

"The impact of Air NZ being placed at a 14 per cent discount doesn't help the market in terms of the index."

The national air carrier's shares were placed in a 24-hour trading halt on Wednesday pending the sale of BIL's stake, which fetched $96 million at 42c per share, from Wednesday's closing price of 49c.

The sale showed up in the market's early turnover figures.

Air NZ fell immediately to 42c on opening this morning.

"It was a pretty big discount; the market's now starting to move it higher," Mr Gallagher said. But by 11.40am, after a brief foray to 43c, it was back to 42c. BIL International Ltd was down a cent to 66c.

Market leader Telecom was down 4c to 555 by 11.30am. Most of the heavy early turnover in the stock was trades made in Australia late yesterday which were re-crossed on the local market this morning. "The actual volume traded on the market hasn't been that big", Mr Gallagher said.

Number two stock Carter Holt Harvey, which yesterday added to the market's woes by announcing a worse than expected full year 2003 result also continued to fall, losing 5c to 197.

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

While still trying to shake off the effects of the surprise rate hike by the Reserve Bank which sent the NZSX-50 down 1.4 per cent yesterday, Mr Gallagher said the rest of the market was in fair shape.

"We've just had some fairly positive building consent numbers out, which should support Fletcher Building."

The Statistics NZ figures released this morning showed there were 2498 consents issued for new homes in December, driven largely by a 33 per cent increase on those franked in Auckland.

Fletcher Building, however, was stubbornly showing no sign of moving up on the data and had fallen 6c to 398 by 11.40am.

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, was up 5c to 690 at 11.30am.

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.

Among other stocks to move by 11.30am were: Auckland International Airport down 7c to 668, BayCorp Advantage up 5c to 325, Contact Energy down 8c to 552, Fisher & Paykel Healthcare down 5c to 1215, Michael Hill up 2c to 502, NZ Refining down 9c to 1631, NZX down 4c to 615, and Software of Excellence down 6c to 161.

Meanwhile, on overseas markets yesterday, US Blue-chip stocks rose while technology stocks fell as investors switched money into established companies and out of tech shares after the Federal Reserve hinted an interest rate hike may be closer.

The Dow Jones industrial average rose 41.92 points,or 0.4 per cent, to 10,510.29, according to the latest data.

The broader Standard & Poor's 500 Index was up 5.61 points, or 0.5 per cent, at 1134.09. The technology-laced Nasdaq Composite Index fell 9.14 points, or 0.44 per cent, to 2068.23.

In London, Britain's top shares closed at a six-week low on Thursday, hit by disappointing numbers from index giant AstraZeneca and by large fund-related sell programmes, dealers said.

The blue-chip FTSE 100 index ended down 56.6 points, or 1.3 per cent, at 4411.5, its worst close since mid-December.

In Tokyo, Japanese stocks fell for the fourth straight session on Thursday as investors sold Sony Corp and other exporters on continued worries about the strong yen and after a tumble in Wall Street shares.

The benchmark Nikkei average ended down 0.67 per cent at 10,779.44 -- its fourth straight fall representing the longest losing streak since August.

- NZPA