Nz stocks: US woes blamed for kiwi plunge

The sharemarket took a nosedive of more than 1 per cent yesterday as corporate governance concerns in the United States seemed to take a toll in New Zealand.

Turnover was a healthy $84 million, but prices fell and the NZSE-40 capital index dropped 24.91 points to 2102.71.

Broker Greg Arnott of DF Mainland said the trend was not too worrying.

"The sharemarket in recent weeks has been extremely strong and I think we've been looking for an excuse to have a correction," he said. "With the latest woes in the US, we've said enough's enough and we've slipped back."

The market was led down by Telecom, which fell 18c to $5.32.

Telecom denied an Australian media report that it was struggling to meet its phone contract obligations with the Commonwealth Bank of Australia.

It topped the turnover by volume and value, trading five million shares worth $27 million.

After the market closed, Telecom said it expected to announce a large new contract in Australian within the next few days.

Mr Arnott said some sell orders had entered the market, possibly from overseas.

There was quite a high level of institutional selling, particularly in Fisher & Paykel and Sky City.

F&P Healthcare was down 50c to $13.40, which brokers put down to residual jitters about US competition and concern the company might not meet its upcoming profit target.

Sky City was down 8c at $5.95, but was "still fundamentally a good company", Mr Arnott said.



Baycorp Advantage also lost heavily, down 45c to $6.85. Genesis fell 5c to $3.10 despite announcing a collaborative research deal with US company Immunex, and The Warehouse lost 5c to $6.74 as investors ignored its healthy Christmas sales figures.

Also apparently pushed down by the overall market was Tranz Rail, down 4c to $3.92 after announcing a $43.3 million half-year profit, compared with a $6.71 million loss a year earlier.

Companies to defy the trend included Powerco, which was up 3c to $1.94, Carter Holt Harvey, up 2c to $1.94, Fletcher Building up 3c to $3.06 and BIL International up 2c to 42c after reducing its share in Singaporean beverage company Fraser & Neave.

Ailing mining company Otter Gold shot up 3c to 30c after New Zealand Oil and Gas refused to sell its stake to takeover bidder Normandy NFM.

NZOG, whose own shares fell 1.3c to $3.90, owns 3.5 million Otter shares and holds 1.4 million options.

There were 31 rises and 60 falls among the 143 stocks traded.

The NZSE-10 capital index fell 17.62 points to 945.78.

The kiwi dollar was dragging its heels and seemed likely to trade lower overnight.

One local dealer said it had been "very, very quiet", although the kiwi traded in a reasonable range of 41.55/80USc.

"It's seen a little bit of selling pressure against the aussie, and that's pretty much it," the dealer said.

He expected the kiwi to ease during the next week towards 41USc, and probably below.

He blamed overseas selling and ' "a lack of legitimate buying".

"Overall there seem to be people that got into the New Zealand dollar earlier in the year on the promise of greater advantages on the top side, and I think they're just looking to exit their positions.

"I think overall the focus has returned a little bit to the down side, with the euro's move lower and the aussie's inability to sustain its moves higher," he said.



Today was expected to be a busy day for local statistics.

The December month tax data was due out at 9 am, the Government December financial statements at 10 am and the household labour force survey and December quarter unemployment data due at 10.45 am.

At 5 pm the kiwi traded at 41.69USc, up slightly on Wednesday's 41.63USc close.

The Australian dollar was unchanged at 50.90USc.

On the crosses the kiwi was at 81.89Ac , 55.82 yen, 29.51p, and 0.4807 euro.

The kiwi was at 51.03 on its trade-weighted index, and 90-day bank bills were unchanged at 4.88 per cent.

- NZPA