NZ Stocks: Fletcher only star in rout

An unexpected bath on the sharemarket sent share prices spiralling 2.7 per cent down on hefty volumes.

"It was an absolute rout," said John Rattray of JP Morgan.

The market opened weakly after another bad day on Wall St and prices plunged sharply in late trading, led by aggressive selling from ABN Amro.

The rout was across the board with the outstanding exception of Fletcher Energy, which on its penultimate day's trading rose 21c to $9.76.

But for that influence, the NZSE-40 capital index's 55.69 point slide to 2033.83 would have been more than 3 per cent.

Yesterday's fall and Wednesday's 1 per cent drop more than wiped out Tuesday's big and encouraging 2.4 per cent gain.

JB Were's Murray Rutherford said all global markets had been flighty.

"It was a day which has seen big volumes on the offer side, and that has spooked a few people. The selling got more aggressive as the day went on. So people were keen to simply get out."

ABN Amro's Nigel Scott blamed the rout on "orders" and lack of liquidity and cash.

Two of the better performing heavyweights, Telecom and Carter Holt Harvey, took the brunt of the pain. Telecom slumped 32c to $5.70 and Carter 13c to $1.84.

Mr Rattray noted that the selling was in all the New Zealand stocks in the Morgan Stanley Capital Index (MSCI) index which is the opposite to expectations. Investors were expected to reinvest the cash they receive next week from Fletcher Energy.

"Maybe offshore investors decided to cut their New Zealand weightings, rather than what the market had been expecting - for the Fletcher Energy money to get redistributed," said Mr Rattray.

"I don't think the market was as weak as the prices suggested - it just gapped down."

Further index-related buying was predicted to support Telecom because of Fletcher Energy dropping out of the MSCI index and because of Telecom's inclusion in the ASX indices starting next month.

Brokers estimate that there may be another 14c value in Fletcher Energy on Wednesday's price, depending on how the New Zealand dollar trades, the price of Capstone, which was on $US28 ($68.24), and what price Rubicon trades at. Rubicon lists on Monday and is trading around 38c in the grey market.

Standout sufferers in the rout included: Contact, down 17c to $2.92, Air NZ Bs, 12c to $1.68, AMP, 30c to $24.05, Sky City, 30c to $9.10, Telstra, 13c to $7.67, The Warehouse, 18c to $6.05, Westpac NZ, 45c to $13.40, ANZ, 70c to $16.50, Baycorp, 10c to $1.15, Fisher & Paykel, 15c to $8.10, Fletcher Building, 6c to $2.15, Genesis, 20c to $3.80, INL, 10c to $3.60, Lion Nathan, 9c to $4.85 and Wilson & Horton, 45c to $10.55.

There were 33 rises against 82 falls among the 151 traded.

- NZPA