NZ stocks: Record day on NZ market as Telecom stake onsold

The New Zealand sharemarket recorded its busiest ever trading day today as the cornerstone shareholding of New Zealand's biggest company, Telecom, changed hands.

The benchmark NZSE-40 capital index closed down 11.31 points, or 0.56 per cent, at 1979.31. Turnover clocked in at just under $2 billion - eclipsing an earlier record of $1.3 billion hit in April 1998 when $603 million of Lion Nathan shares were sold. By comparison, just $79 million worth of shares traded yesterday.

Telecom, which with a hefty 21 per cent weighting acts as a bellwether for the market, yoyo-ed between 463 and its closing level of 480, down 2c, after US telephone giant Verizon exited its 20.5 per cent stake overnight.

The 370 million shares were hawked to investment bank Merrill Lynch for $4.35 a share - a substantial discount to yesterday's closing price - before being onsold to a range of mainly US, British and Australian institutions at $4.50/share.

Despite today's 2c price fall, brokers expected the deal to be positive for both Telecom's share price and the overall market longer term.

"I think this Telecom thing could be a bit of a key to unlocking the market because it's been overhanging the leading stock for a while," said Richard Burton, a broker with Forsyth Barr Frater Williams.

"Until it was put away, really, the overall market couldn't go ahead."

Now, with today's strong gross domestic product (GDP) figures coming through, both the market and leading stock were set for better days, he said.

However, "one wonders whether the people who bought (Telecom shares) are bedded down or whether they're just going to turn it over for a small gain. It might just take a week or two for the market to digest it", Mr Burton said.

Official data out today showed New Zealand's economic growth continued to outstrip that of most developed nations in the second quarter, with GDP rising by an unexpectedly strong 1.7 per cent in the three months to June.

Economists were quick to caution that the best was now past, however, and interest rates would likely stay on hold for the near future.

In the broader market the tone was mixed, with falls narrowly outnumbering rises by 48 to 44 among the 127 stocks traded.

Market No 2 Carter Holt Harvey eased a cent to 160 after yesterday's strong gains, retailer Briscoe Group fell 7c to 250, Fletcher Building added 11c to 301, Fisher and Paykel Appliances eased 5c to 1020, Fisher and Paykel Healthcare was 6c lower at 970 and The Warehouse fell 5c to 710.

Sky City fell 25c to 710 - giving up most of yesterday's 4 per cent gain, while Guinness Peat Group slipped a cent to 161 after forestry investor Rubicon today advised shareholders against accepting GPG's takeover offer.

GPG launched a partial offer for 40 per cent of Rubicon at 75 cents per share today. The offer is conditional on GPG raising its current 19.99 per cent stake to at least 50 per cent of Rubicon.

However, Rubicon directors countered the launch with a unanimous recommendation that shareholders not accept the offer, which it considered too low.

An independent appraisal report by Grant Samuel and Associates concluded: "In Grant Samuel's opinion the full underlying value of Rubicon shares is in the range of 98c to $1.28 per share."

- NZPA