NZ stocks: Brokers: Telecom noise will ease

Telecom suffered further fallout yesterday from its accounting treatment of some earnings, sending the sharemarket down.

It closed 10c down at $5.12 - adding to Wednesday's 10c loss that followed an announcement by the Securities Commission that it was looking into Telecom's accounting of the sale of spare capacity on some of its cables.

Brokers here said the "noise" in the media on the issue was scaring off some investors but most analysts were not worried about the transparency of Telecom's accounts and believed the stock would recover.

"It's just a non-issue," said Salomon Smith Barney broker Craig Robins.

The NZSE-40 capital index closed 3.26 points down at 2068.85, which brokers said was disappointing given that Wall St had powered ahead.

The top 10 index closed 4.56 points down at 923.10. The small stocks index rose 2.82 points to 5864.74.

In a market that was weak overall, there were pockets of good news, notably the performance of Tranz Rail and Natural Gas.

Total turnover of $170.5 million was boosted by the sale of 24 per cent of Tranz Rail, worth $106.5 million by Canadian National Rail.

Brokers said the sale to a range of institutions at a 10c premium to the prevailing price of $3.60 was a good one for the stock and for the market. Tranz Rail lifted 30c to close at $3.90.

The sale had cleared the air for Tranz Rail, which was now seen as a more attractive stock because of greater liquidity.

The market liked the rebound of Natural Gas Corp, which posted a $16.1 million net profit for the six months to December 31.

NGC lost $302 million in the year to last June. The December half was only a little over half the $31 million profit recorded in the same period a year earlier, but bettered average expectations for a $3 million net profit.

NGC rose 6c to $1.29.

But a five-fold increase in Wrightson's half-year profit failed to satisfy investors. It closed 3c down at 125c after reporting a $6.3 million net profit and a 3.5c dividend.

The Fisher & Paykel stocks continued to recover from their beating last week. F&P Appliances rose 9c to $9.39 and F&P Healthcare rose 20c to $11.00.

There was a mixed bag for many of the leaders. Losers included Fletcher Building, down 8c to $2.95, Sky City, 5c to $6.14, Tower 7c to $5.13, Contact 3c to $3.87, and The Warehouse, 2c to $6.48.

Among the gainers were Lion Nathan, up 6c to $5.91, Baycorp Advantage, 15c to $6.40, Independent Newspapers, 8c to $3.90, and Westpac NZ, 23c to $18.60.

There were 43 rises and 47 falls among the 137 stocks traded.

The kiwi drifted lower and was likely to drop further over the next couple of days, dealers said.

At 5 pm it closed at 41.85USc, down from 42.13USc the day before.

Mike Symonds, BNZ's chief currency dealer, said the kiwi's failure to test 42.20USc overnight had led to some profit-taking.

"While we hold the broad 41.40-42.40USc range in the kiwi, the range trading continues, albeit we believe that the risks are for the kiwi to drift lower from here," he said.

On the crosses at 5 pm the kiwi was buying 81.18Ac, 55.95 yen, 29.30p and 0.4808 euro.

The trade weighted index was at 51.02, the monetary conditions index minus 764 and 90-day bank bills were at 4.98 per cent.

- NZPA