NZ stocks: Tranz Rail drags market downwards

Dominated by a horror day for rail operator Tranz Rail, the New Zealand sharemarket bucked international trends and headed south today.

While the overseas markets were looking "perky", the NZ50 gross index fell 24.7 points, or 1.23 per cent, to 1981.4 at closing from last night's 8 week high of 2006.1. The top 40 capital index was down 27.03 points, or 1.37 per cent, to 1945.06.

Rob Gwyther of Macquarie Equities described the falls as "a localised situation".

"We're the market that's down in the region," Mr Gwyther told NZPA.

"Asia's up, Australia's up, all the markets are up apart from New Zealand and you can put that down to lots of concerns about the Tranz Rail situation and the spill-over that's created."

Tranz Rail quickly fell to 30c in early trading this morning. The stock recovered slightly rising as high as 46c before falling back to 35c, a fall of 27c on yesterday's closing price of 62c. The company has lost 88 per cent of its value in the last year.


This most recent slump in its share price was precipitated by a profit warning which prompted credit rating agency Standard and Poor's to downgrade the company's long-term debt five places. Moody's followed with its own downgrade.

Tranz Rail is New Zealand's sole rail operator and is considered an essential part of the country's infrastructure.

Mr Gwyther said today's trading in Tranz Rail was dominated by a couple of large institutional sellers.

He said trading in the stock was beset by uncertainty.

Meanwhile, after helping to propel New Zealand sharemarket nearly 1.2 per cent higher in trading yesterday Independent Newspapers Ltd "just meandered around" today, Mr Gwyther said. INL was down 2c to 406 at the close of trading.

Sky TV, 66-per cent owned by INL, also "drifted off" finishing the day down 7c at 393. Telecom, also a big Sky TV share holder followed suit finishing 12c down on 463.

Enjoying the biggest gain in trading today was AMP which climbed 50c to 880, a result Mr Gwyther said was driven by a couple of good days for the company on the Australian market and a generally more confident global outlook for equity markets.

Carter Holt Harvey rose by 1c to 168 following its announcement of a solid first quarter profit result tempered by an ongoing strike at its Kinleith pulp mill and the effect of New Zealand's currently high electricity prices.

Other shares to rise included Fletcher Building up 2c to 328, Restaurant Brands up 3c to 150, The Warehouse up 8c to 542.

Meanwhile Air NZ shed another 4c to 39c today, fuelled by uncertainty over the airline's stalled alliance with Qantas and the effect of the ongoing outbreak of severe acute respiratory syndrome on the airline industry. Mr Gwyther said the already "distressed" stock " probably got a little spill over from Tranz Rail as well."

Other losers included

Auckland International Airport down 6c to 512, Contact Energy down 9c to 455, Fisher & Paykel Healthcare down 8c to 1040, Lion Nathan down 5c to 595, Port of Tauranga down 5c to 420, and Steel and Tube down 6c to 327.

Tranz Rail led turnover by volume on the market today with 41.1 million shares traded.

Telecom led trading by value with $25.56 million worth of its shares changing hands.

There were 43 rises and 45 falls on 130 stocks traded.

- NZPA