NZ Stocks: Telecom closes lower in active trading

Option-related selling hit Telecom yesterday, helping push the main share index down 1.23 per cent.

The NZSE-40 capital index ended down 26.55 points at 2125.13 and small stocks also fell. Total market turnover was worth a huge $205.37 million, Telecom accounting for $121.49 million, Fletcher Forests $10.80 million and Fletcher Energy $6.69 million. Falling stocks outnumbered risers 72 to 35.

Telecom finished down 11c at 705. ABN Amro's Nigel Scott said an options close-out boosted volumes in the stock.

Mr Scott said yesterday's fall was less a reflection of changing views on Telecom's value than simply part of the process of its transformation into a growth stock from one focused on yield.

"You're going to get a mixture of opinion on Telecom for a while."

Some have been selling Telecom after its Tuesday annual results announcement, when it said it would halve its dividends to fund growth.

Interest was again strong in Fletcher Forests, with some expecting an announcement as to its future ownership on Monday.

"I'm surprised the marketplace continues to believe something is imminent in Forests all the time," Mr Scott said.

"These deals were always going to be tough deals. I think people were really surprised at the price paid for Fletcher Paper and everyone thinks it's going to roll on into the other groups - but it's a little bit tough."

Fletcher Forests was down 2c at 88, Building eased a cent to 217 and Energy dropped 10c to 776.

Lion Nathan fell 12c to 466. It dropped out of an international benchmark index for NZ without being included in the comparable Australian one.

INL was down a cent at 415 after its result. Managing director Mike Robson said it was putting on hold any merger with 49.6 per cent-owned Sky TV.

Sky TV, which released its numbers earlier this week, was down 9c at 399.

Jeweller Michael Hill said it made a record tax-paid profit of $9.94 million for the June year, 13.3 per cent up from the previous year.

The stock was up 10c at 320, but on minimal trade. Michael Hill said it might increase its dividend pay out ratio from the current 50 per cent of net profits.

Montana Wines, which announced a near doubling in bottomline profit, gained 7c to 243. The profit included $17.1 million in one-offs.

Carter Holt dropped 3c to 185, Contact Energy lost 8c to 260, Sky City gave up 3c to 782, and TransAlta fell 5c to 280.

National Mail surged 15c to 100, Tower added 6c to 545 and Sanford lost 23c to 450.

- NZPA