NZ stocks: Investors send Telecom to 3-year low

New Zealand share investors sat on their hands yesterday ahead of the Federal Reserve's crucial decision on interest rates due this morning.

While Fed chairman Alan Greenspan was widely expected to leave rates unchanged, the uncertainty was enough to put the buyers off.

Merrill Lynch broker Matthew Rose said it was quiet in all equities markets around the world. However, here there was solid volume of $160.6 million including $75.1 million of Telecom shares traded.

The NZSE-40 capital index closed 10.37 points down at 2096.60. Telecom led the market down, falling to its lowest close since May 1997. It ended 7c down at 689 and at one stage fell as low as 686. Salomon Smith Barney broker Craig Robins said Telecom was suffering "churn" as dividend investors, both institutional and personal, quit the stock. "While there is very good value in the story on a longer-term view, near-term it is hard to see the [positive] catalyst with global telcos not really performing.

"We have got the first leg of Telecom's strategy with them taking out AAPT. The second leg is some time away and probably a bit more complex, so the jury is still out," Mr Robins said.

Credit Suisse First Boston broker David Price said there were still unanswered questions about the company. "At this stage, the stock is just going to languish. There's no new driver for it."

Local investors took the opportunity to take profits in Fletcher Energy, which closed down 10c at 765 despite further rises in world oil prices and another lift in its 11 per cent owned turbine manufacturer Capstone.

Salomon Smith Barney believes Fletcher Challenge will have to sell Fletcher Forests before it sells Energy because of Forests' heavy debt.

Ports of Auckland closed 1c lower at $4.10 after reporting a $10 million lift in its year profit to $42.8 million. Rival Port of Tauranga rose 7c to 527.

Sky TV fell 8c to 388. Brokers said it was capped after its $80 million share placement last week at 399, which has temporarily satisfied demand.

Wilson & Horton exchangeables rose 50c to $12.30 after the company reported its half-year result.

Tranz Rail fell 2c to 388 after announcing on Monday the first instalment of what is expected to be a major restructuring.

Others to move included Advantage, down 8c to 282, Axa, up 9c to 350, Baycorp, up 8c to 1298, Contact, down 3c to 257, and Fisher & Paykel, up 10c to 745. Auckland Airport, which announced higher landing charges, rose 5c to 295.

New Capital Market listing Rocom continued its meteoric run since hitting the board last week at an issue price of 50c. The telecommunications supplier jumped a further 14c to 124c.

- NZPA