NZ stocks: Airport's shares in tailspin

Auckland International Airport deflated the market yesterday, after the Commerce Commission's preliminary price-control recommendation.

Dominant stock Telecom firmed but other smaller blue chips combined to push the overall New Zealand sharemarket down.

The NZSE-40 capital index ended down 6.99 points at 2062.06, but smaller stocks firmed, the NZSE-SCI capital index rising 9.38 points to 5523.98.

Total turnover of 71.32 million shares was worth $80.55 million, Telecom accounting for $18.95 million, Fletcher Forest preference shares $12.19 million, and Lion Nathan $8.23 million.

Rises outnumbered falls 59 to 50 among the 142 stocks traded.

Hamilton, Hindin, Greene's Grant Williamson said the main reason for market weakness was Auckland International Airport, which fell 24c, or 6.3 per cent, to $3.56, on the Commerce Commission's recommendation.

JP Morgan broker Geoff Brown said the recommendation would have surprised the market.

"Although this had been under review, there had been no indication previously that this might happen although you have to remember that Air NZ had disputed the increases that Auckland Airport had proposed," he said.

AIA raised its landing charges in September, sparking a legal challenge from Air NZ. However, the Commerce Commission said its recommendation could change after consultation with interested parties. It is due to make a final recommendation to the Minister of Commerce in November.

Mr Williamson said more selling of the airport's stock was likely today.

Montana closed down 10c to $4.80, with investors pricing the stock in line with Allied Domecq's new offer price announced on Monday. Lion's partial offer for 11 per cent at $5.50, which would give it control even after being forced to sell 19 per cent of defaulter securities, and the rest at $3.70 drew scorn for New Zealand's new takeover rules from across the Tasman where they have long been regarded as unfair.

"Lion still has the upper hand," Mr Williamson said. It was up 10c at $5.50.

TrustPower lost ground with the drawn-out takeover competition on its register finally stymied by the new rules. It closed down 20c at $3.10.

Among stocks to gain, Contact rose 4c to $3.06 based on likely earnings from high wholesale electricity prices this year.

Telecom was up 2c at $5.52 after overseas telcos did well overnight.

Air New Zealand As eased a cent to $1.09 and the Bs rose 5c to $1.52.

Elsewhere, Advantage jumped 7c to 64c, Brierley Investments eased a cent to 67c, Fletcher Forests ordinary and preference shares eased a cent to 30c, Fletcher Building gained 5c to $2.42, INL fell 15c to $3.75, Mainfreight was up 6c at $1.18, Natural Gas Holdings rose 4c to 91c, and Sky City fell 4c to $10.90. Sky TV lost 5c to $3.25.

The Stock Exchange system was slow to start yesterday, with the market opening 15 minutes late at 9.45 am.

* The New Zealand dollar rallied on the back of the aussie yesterday, but by the close the focus was going on today's central bank interest rate announcements on both sides of the Tasman. The kiwi finished at 40.80USc from 40.63c on Monday. The aussie, which was boosted by building data, outperformed comfortably, closing at 51.44USc from 50.97c, and pushing the kiwi down on the cross to 79.55Ac.

- NZPA