NZ stocks: Telecom continues to pull market down

12.00 pm

Telecom continued to drag the sharemarket down as a furore over its accounting treatment of some earnings clouded the stock.

It was down 6 cents to 516 at 11.30 am after losing 10c yesterday following an announcement by the Securities Commission that it was looking into Telecom's accounting of the sale of spare capacity on some of its cables.

CS First Boston broker James Snell said the news headlines were undermining the stock but he saw it as a short-term phenomenon and there were no major underlying concerns about Telecom's accounts.

Total turnover of $130 million was boosted by the sale of 24 per cent of Tranz Rail, worth $106.5 million by Canadian National Rail. Brokers said the sale to a range of institutions at a 10c premium to the prevailing price of $3.60 was a good one for the stock and for the market. Tranz Rail lifted 27c to 387 after the result.

The sale was arranged by JB Were. Manager of private stockbroking for JB Were, John Cobb, said there was no cornerstone holding and the stake was sold to a range of private and offshore institutions and some private JB Were clients.

The sale had cleared the air for Tranz Rail with first Wisconsin, and then CNR, making no secret of their desire to sell.

"It was not news that the stake was going to come on the market at some point. Now it's cleared, the fundamentals of the company will now become the focus," Mr Cobb said.

"Previously, the focus of investors was what was going on in terms of the part that was for sale."

The NZSE-40 capital index was down 4.45 points to 2067.65, was in contrast to Wall Street which made its biggest gain in 11 weeks. The Dow gained over 2 per cent and the Nasdaq by 1.4 per cent.

US stocks staged a dramatic, late-day rally as investors ventured back into the market for cheap picks after days of selling fueled by concerns over accounting practices and corporate debt.

The market liked the rebound of Natural Gas Corp, which posted a $16.1 million net profit for the six months to December 31. NGC lost $302 million in the June 2001 year. The December half was only a little over half the $31 million profit recorded in the same period a year earlier, but bettered average expectations for a $3 million net profit.

NGC rose 4c to 127 after the result.

Other movers included: Contact Energy, down 5c to 385, Fisher & Paykel Appliances, up 10c to 940, F&P Healthcare, up 20c to 1100, The Warehouse, down 7c to 643 and Westpac NZ, down 9c to 1828.

There were 28 rises and 36 falls among the 109 stocks traded.

- NZPA