NZ stocks: Profits taken on major players

A subdued sharemarket turned its back on last week's gains with the key NZSE-40 closing down more than 1 per cent yesterday.

Philip Hardie Boys of ABN Amro Craigs said the leaders fell as profit-takers moved in, particularly on Telecom, after last week's gains.

He described the overall market as "very subdued."

"There was more of a lack of interest than anything, there's no compelling reason for investors to buy NZ shares from Friday's prices particularly, so there was a bit of profit-taking."

The NZSE-40 capital index closed down 27.05 points, or 1.28 per cent, at 2093.34, while the small companies' NZSE-SCI capital index lost 19.44 points at 5076.76.

Topping the minimal turnover of $64.36 million was Telecom's $25.02 million, trailed by Lion Nathan's $5.46 million.

Telecom ended down 13c at $6.37 after the Australian Financial Review reported that Telecom had revived plans of a $1.3 billion float of its internet service, Xtra.

Telecom would not comment on the report.

Carter Holt Harvey shed 6c to $1.77, The Warehouse was down 7c at $6.10, and Contact Energy also lost 7c, to $2.90.

UnitedNetworks was down 5c at $8.30, after 70 per cent owner Kansas-based Utilico told UnitedNetworks' annual meeting that it had no immediate plans to sell down its stake further.

UnitedNetworks told the AGM it was comfortable with forecasts of 5 to 6 per cent earnings growth, and said it had received $1.5 million in service requests for its new fibre optic network.

Late in the day corporate dairy farmer Tasman Agriculture, down 1c at $1.58, announced a special dividend and share buyback to the tune of $107.3 million.

Wellington-based investment company Southern Capital also announced it would buy a 22 per cent TasAg stake from Dairy Holdings, which is in the process of acquiring Brierley Investments' 66.1 per cent stake in TasAg.

Bucking the downward trend were Fisher and Paykel, up 5c at $8.25, and Tranz Rail, up 16c at $3.90.

Mr Hardie Boys said Tranz Rail's rise was probably due to reports it was close to selling its long-distance rail passenger services. However the movement was on only 30,000 shares. Guinness Peat Group was up 1c at $1.61 and Sanford rose 15c to $6.20.

Air New Zealand A shares were up 2c at $1.12, having hit a day high of $1.17, while the B shares were unchanged at $1.58, as the grounded planes of subsidiary Ansett Australia began to take to the air.

After the market closed the Government announced that Air NZ's main Australian rival, Qantas Airways, would start flying main routes in New Zealand from today to pick up the pieces from failed franchisee Qantas NZ. Qantas Airways had not indicated if it would remain in New Zealand in the long term.

Elsewhere on the market, INL was down 5c at $3.35, Sky TV lost 9c to $3.35, Fletcher Building shed 3c to $2.32, Telstra was down 7c at $8.46 and casino operator Sky City, under managing director Evan Davies, lost 19c to $9.16.

Mr Hardie Boys said Sky City had been hit by the wider trend of profit-taking on defensive stocks.

In a surprise decision, Australian Treasurer Peter Costello refused Royal Dutch Shell permission to buy Australian energy company Woodside Petroleum for $A10 billion ($12.6 billion).

Both the aussie and the kiwi were sold down immediately as the market showed its displeasure, but New Zealand was unlikely to be caught in the crossfire, he said.

"I think we've been there, done that. We noticed overseas players certainly walked away from New Zealand over the Lion Nathan transaction [for Montana] when shareholders were not looked after properly.

"When the Government says it's interfering ... it's not something that's normally liked by international investors, they would much rather have a cleaner, 'we can come and go as we please' type thing."

Falls outnumbered rises 53 to 36 on 144 stocks traded.

On Wall St on Friday, the technology-packed Nasdaq Index fell 18.76 points, or 0.86 per cent, to 2163.38.

The blue-chip Dow Jones index dropped 113.86 points, or 1.06 per cent, to 10,579.85.

- NZPA