NZ stocks: Contact shares slump, market index falls off high

12.30pm


Contact Energy led the way down on the sharemarket this morning, as the benchmark sharemarket index fell away from the record high posted yesterday.

By 11.35 am today, the benchmark NZSX-50 gross index had fallen 3.22 points to 2731.61, while the NZSX-All capital index was up 0.56 points at 918.21.

Shares in Contact Energy fell 13c to 581 by 11.35am, following the much anticipated announcement that California-based Edison Mission Energy had sold its 51.2 per cent stake in the company.

Australia's Origin Energy is buying the stake for $1.67 billion in cash and assumed debt, or $5.67 per share.

NZ First Capital's Barry Lindsay said the news was no surprise, although most people thought Australian Gas Light (AGL) was the lead contender for the stake. He said the purchase price was within the realms of expectations.

"The share price has come back to 580...at that price it's the fundamentals that are supporting it as opposed to any expectation of ongoing corporate activity or a revised bid or anything like that," Mr Lindsay said.

The news has taken the heat out of NGC's share price. NGC is 66 per cent owned by AGL, and AGL had been tipped to sell its stake in NGC if it bought the Contact holding.

NGC fell 11c to 280, but Mr Lindsay said the fall was not dramatic and the stock would also find support on its fundamentals rather than being inflated by speculation of possible corporate activity. Telecom rose 1c to 600, after yesterday jumping 14c.

"What catches the eye...is that it is not on a thin market, it's happening on the back of very large volumes," Mr Lindsay said.

Telecom's turnover of $36.8 million dominated total market turnover of $58.2 million.

Fletcher Building has also been enjoying renewed interest and demand following Steel & Tube upgrading its profit forecast earlier this week.

Fletcher Building was up 9c at 9c at 490, while Steel & Tube fell 2c at 433.

Pumpkin Patch continued to rise on the back of yesterday's announcement that it now expected a net profit for the July year of $7.5 to $8 million, up from the $4 million forecast in its prospectus two months ago.

The stock was up 4c at 154 today, continuing on from a 13c rise yesterday.

Of the 125 stocks traded by 11,35 am there were 33 rises and 28 falls.

Other stocks on the move by 11.35am today included, Wrightson up 1c at 143, Auckland International Airport down 4c at 681, Fisher & Paykel Healthcare up 25c at 1335, Michael Hill Jeweller up 6c at 599, and Carter Holt Harvey down 2c at 219.

In the US overnight, the Dow Jones industrial average rose 55.01 points to 10,149.07. The Standard & Poor's 500 Index gained 7.77 points to 1,108.67, and the Nasdaq Composite Index rose 33.24 points to 1,917.07.

- NZPA