NZ stocks: Tranz Rail plunges, NZ sharemarket ignores rises offshore

12.00pm

Tranz Rail shares' plunge today was the main feature on the New Zealand sharemarket which has eased from yesterday's eight-week high.

By late morning the benchmark NZ50 gross index was down 14.26 points, or 0.71 per cent, at 1991.86, while the top-10 index was down 0.65 per cent at 900.15.

Light turnover of 12.96 million stocks valued at $24.93 million was topped by Tranz Rail's 4.55 million shares.

Tranz Rail shares opened at a fresh low today, down 10c at 52, before quickly halving in value to low of 30c. By midday they were down 19c at 43.

ABN Amro Craigs retail equities adviser Nigel Scott said the company had provided the market with a lot of information and trading was currently being driven by sentiment.

"Markets are driven by fear and greed, and there is a bit of fear in this story.

"It's an emotive issue with Standard & Poor's clearly at loggerheads with management," Mr Scott said.

Heavy trading in Tranz Rail shares in the last week meant it was not only retail investors buying up the cheap stock but institutions as well.

On the sell side, some of the larger trades were from margin players who wanted to get out once they realised they would not achieve the profit they wanted on the shares.

The rail operator, considered an essential part of the country's infrastructure, has lost 88 per cent of its value in the last year.

The slumping share price happened after a profit warning prompted credit rating agency Standard and Poor's to downgrade Tranz Rail's long-term debt five places, which Moody's followed with its own downgrade.

The Government is keeping a "watching brief" on Tranz Rail's financial situation.

Independent Newspapers shares were down 3c at 405 today after their 21 per cent gain yesterday when they resumed trading following their suspension.

INL gained on Monday's announcement that John Fairfax Holdings was buying its newspapers for $1.2 billion, subject to shareholder approval.

INL's 66 per cent-owned pay television asset Sky Network Television was down 1c at 399. while INL and Sky shareholder Telecom was down 4c at 471.

Just after Carter Holt Harvey posted a $34 million rise in net first quarter profits today to $51 million, the company's shares were down 1c at 166.

Air New Zealand lost 2c to 41, Contact Energy was down 7c at 457, Fisher & Paykel Appliances shed 15c to 1065, Auckland International Airport was down 3c at 515, F&P Healthcare lost 8c to 1040, and Fletcher Building was down c at 325.

On the up side AMP gained 10c to 840, TrustPower rose 5c to 410, The Warehouse was up 6c at 540, and Restaurant Brands rose 2c to 149.

There were 35 falls and 34 rises on the 101 stocks traded.

The New Zealand market's rises were despite gains on Wall St, which is currently in the thick of the quarterly reporting season, and a 1.75 per cent gain in Britain's FTSE-100.

The Dow Jones industrial average rose 50 points, or 0.6 per cent, to 8401; the broad Standard & Poor's 500 edged up 5.59 points, or 0.63 per cent, to 891; and the Nasdaq Composite Index rose 6 points, or 0.5 per cent, to 1391.

- NZPA