NZ stocks: Telecom gives market mighty shot in arm

8.00pm

The local market got another mighty boost from interest in Telecom shares today, helping it shrug off Wall Street blues.

The NZSE-40 capital index rose 12.80 points, or 0.65 per cent, to 1992.11. But on Wall Street, the Dow Jones fell 3.7 per cent as bearish forecasts emerged from General Electric and a profit warning from Philip Morris.

Telecom was the star of the day, climbing at one stage to $5, which brokers said was impressive given the telco industry was down overnight.

It ended up 12c or 2.5 per cent higher at 492 on a turnover of 28 million shares worth nearly $136 million. On Friday the stock dipped but helped the NZSE to a record daily turnover after major shareholder Verizon sold 20.5 per cent of the New Zealand telco's shares.

Brokers said today's demand might have meant that Australasian investors were caught short when Verizon's shares were placed on Thursday night.

"Telecom represents pretty good value," said Craig Brown of Walker Capital Management, who wanted to buy more stock than he got in Verizon's sale.

"We expect it will get revenue growth and pay down some debt, and then look at upping the dividend in a couple of years."

The big deal had galvanised the market, Nigel Scott, an ABN Amro Craigs Equities broker said.

"People have been waiting for that deal for quite a while, so it's brought out a lot of people to play in the stock, a lot of investors to look at their positions."

In other news, there was also heavy turnover in some of the other leaders. Fletcher Building saw $12.9 million worth of shares change hands, but lost 2c to 299.

Carter Holt continued its slide, losing 2c to 158 on $4.3 million worth of shares, and Natural Gas edged down a cent to 140 on $4.4 million turnover. After the market closed, Natural Gas announced the $61 million sale of its retail gas customer base to Genesis Energy.

"It's the end of month, end of quarter, there is always some indice-type changes that go on and there's a bit of volume gone through in Natural Gas," added Mr Scott.

Sky City gained 10c after its rollercoaster ride since going ex-dividend last week, while INL was up 13c to 320 after forecasting that its Stuff internet news site would be profitable by 2005.

INL and its majority-owned Sky TV had been "sitting on the low side" as people anticipated an overhang in those stocks if Telecom sold its stakes in the companies, brokers said.

AMP was down 55c to 1365 as the company announced a new chief executive to replace Paul Batchelor who resigned amid the company's major share slide last week. Other moves included Baycorp Advantage up 15c to 365, while Port of Lyttelton was up a cent to 156 despite losing out to other ports on servicing P&O Nedlloyd's super-container ships. The contract equated to around 10 per cent of its business.

Falls narrowly outnumbered rises by 42 to 41 on 120 stocks traded.

In the United States on Friday bearish analyst forecasts for General Electric Co and a profit warning from tobacco giant Philip Morris Co Inc sent stocks tumbling, pushing market gauges lower for the fifth straight week.

The blue-chip Dow Jones average was the hardest hit, tumbling 295.67 points, or 3.70 per cent, to 7701.45. The broader Standard & Poor's 500 Index fell 27.58 points, or 3.23 per cent, at 827.37, while the technology-laced Nasdaq Composite Index erased an early gain to fall 22.46 points, or 1.84 per cent, to 1199.15.

- NZPA