NZ stocks: Tranz Rail, Tower dominate quiet sharemarket

12.00pm

Tranz Rail's plummeting share price was the main focus of a sluggish morning's trading on the New Zealand sharemarket.

Just after 11am the benchmark NZSE-40 was up 2.35 points to 2024.73 on slight turnover worth $12.3 million, following a 6-point rally yesterday.

Tranz Rail was the major feature, at one stage touching a fresh low of 123 before recovering to 133, down one cent, in light trade.

The rail and ferry operator yesterday confirmed wide expectations that it needed to raise more capital to hold on to the Aratere ferry.

It plans to mount a pro-rata discounted rights issue of around $60 million, and market estimates are that the issue price will be one-for-one at 50c or one-for-two at $1.00.

While the move was "reasonably widely expected," the share price was likely to take a battering, said JB Were's head of research, Richard Leggat.

His firm believed the stock was undervalued but "being realistic, the share price is going to struggle until the rights issue is out of the way".

Mr Leggat said his firm believed Tranz Rail would make its full year operating earnings target of $55 million and $66 million for the following year, but other parts of the market were "sceptical".

First indications would come through the second quarter results in January or early February.

The other stock on brokers' radars today is Tower, which is into the second day of a trading halt.

Tower's board meets today to discuss the company's results for the year to September, and it warned that earnings would be "adverse to current market expectations".

Other stocks to move included Telecom, up a cent to 507, Lion Nathan, up 5c to 600, Fisher & Paykel Healthcare, down 20c to 1100, its appliance unit, down 12 to 1085, and Westpac, up 30c to 1550.

Rises have so far outnumbered falls 25 to 28 on 88 stocks traded.

New Zealand once again ignored Wall St, where stocks seesawed during the session.

Initially they took a tumble, then regained about half their ground after hospital chain Tenet Healthcare reawakened fears about corporate scandals after it said US prosecutors are investigating allegations one of its centres falsely charged for procedures.

The announcement came amid widespread jitters about key economic data expected over the next few days.

At its close, the Dow Jones industrial index fell 30.38 points or 0.36 per cent to 8397.03, while the broader S&P 500 edged down 4.95 points or 0.56 per cent to 885.76.

The tech-laden Nasdaq composite rose 2.98 points or 0.22 per cent to 1329.71.

- NZPA