NZ Stocks: Heavy trading Telecom keeps market afloat

Telecom continued to dominate the sharemarket today, repeating yesterday's fat turnover.

The stock ended 1c ahead at 584 as investor groups wrestled whether its attractive yield outweighed the risks for foreigners of being exposed to the slowing New Zealand economy. Turnover of $92.2 million didn't quite match yesterday's $129.5m but was still very heavy and overwhelmed the rest of the market's trading.

ABN Amro Craigs Broker Matt Willis said a number of overseas investors had taken a "top down" view to sell Telecom because they expect the New Zealand economy to slow and they wanted to lock in currency gains.

"The economy looks a bit stretched with oil prices up and interest rates rising. But the extent of Telecom's dividend means it should get support below $6 from yield investors."

Telecm announced today it was to buy Computerland NZ for $26 million. Computerland would continue to operate as a stand-alone company for at least 12 months.

The benchmark NZSX-50 gross index closed up 2.67 points at 2739.98, while the NZSX-All capital index rose 0.65 of a point to 919.79.

Sky City Entertainment ended steady on 457, after it reported a net profit of $100m for the June year, down from $107m the year earlier. The profit was affected by a write down on its Australian internet betting investment Canbet.

Mr Willis said that while the result was within expectations, it was overall "a little disappointing".

He said there was a perception Sky had failed to turn around its acquisitions and, given that the company had been aggressively buying assets, that was a problem for management. While the Auckland casino remained "a gem", Canbet was "an official disaster".

Until management showed it could a better returns from its Australian acquisitions than the cost of capital, then investors may be wary, he said.

The newly consolidated stock of Air New Zealand fell 6c to 186 after the airline today turned in a flat $166m net profit after tax for the June year. The board did not declare a dividend, but signalled it would be in a position to do so in the 2004/05 year.

Brokers said that while the company the company was being well management, it was hard to see upside in the current year with fuel prices so high. However, it was getting gains from the strong New Zealand dollar.

Promina gained 11c to 446 following its well received result. The Australian and New Zealand general insurer reported a 51 per cent increase in half year net profit to A$204m ($224.5m) and said it looked set to beat expectations for its full year result.


Promina aims for an overall return on capital of 12.5-15 per cent and a dividend payout ratio of 40-60 per cent.

The good news rubbed off on AMP, which rose 23c to 690.

Hellaby rose 12c to a record 570. Despite its strong run this month, Mr Willis said it still seemed undervalued given its high yield and consistent profit performance.

Fisher & Paykel Appliances finally staunched the bleeding since its result on August 16, rising 4c to 417, while its former sister company, Fisher & Paykel Healthcare rose 15c to 1315.

Cavalier fell 8c to 497 and fellow carpet maker Feltex fell 3c to 167.

Sky TV, succumbed to further profit taking, dropping 7c to 538.

Westpac NZ rose 19c to 1752, The Warehouse rose 3c to 455 and Baycorp Advantage rose 8c to 325,

NGC rose 8c to 295 while GRD gained 15c to 230 on light volume and stock exchange operator NZX rose 10c to 860.

There were 55 stocks up and 45 down among the 154 traded.

Some 42.2 million shares traded in all, bringing the total market turnover to $155.3m.

The small stocks index closed 11.39 points up at 7570.44 while the top 10 index rose 0.66 to 1114.50.

- NZPA