Out-of-favour Telecom depresses trade

The sharemarket was softer in mixed trading yesterday as Telecom marked up a 32-month low.

"Early on in the session Telecom was knocked down rather severely but recovered a little bit to a level where a little buying interest was provoked, but the stock is continuing to be out of favour," said Chris Jardine at Craig and Co.

Telecom glimpsed a low of 715, before closing down 25c at 725, its lowest level since it was at 692c in October 1997.

Mr Jardine did not consider Telecom was suffering from an industrywide malaise, pointing to Telstra, whose head shares jumped 36c to 906 and its receipts 30c to 520.

"Telstra has certainly recovered," while Telecom was a case of investors playing it cautious "until the full impacts of any regulatory changes can be assessed."

"The other news of the day was the approval of shareholders in favour of the Fletcher Paper transaction. The impact on price of the Fletcher Group has been minimal but it has certainly cleared a final hurdle and there is going to be a little bit more focus on the other divisions in terms of what plans, as far as restructuring, are in store for them," Mr Jardine said.

Fletcher Paper finished steady at 245c. Of the other Fletcher stocks, Energy shed 20c to 680, while Building added 1c to 229, and Forests remained at 78c.

Among the second liners, Baycorp was again a standout, pushing further into record territory with a 25c rise to $11.75. Mr Jardine considered the stock had been very oversold on news of Receivables Management Group entering the market. Now the market was rerating its pricing more in line with that of Data Advantage in Australia which had seen strong price performance in recent weeks.

The benchmark NZSE-40 capital index closed down 5.96 points, or 0.29 of a per cent, to 2045.60 on high total turnover of $101.5 million, of which Telecom accounted for $38.6 million and Fletcher Energy $16.7 million.

Gainers just edged ahead of losers by 48 to 46 among the 151 stocks traded.

Carter Holt Harveylost 5c to 179, Fisher & Paykel, which on Monday replaced Lion Nathan in the Top 10, was off 8c at 660, and Lion fell 5c to 480.

AMP continued its recovery with a 22c rise to $21.75, and INL grew 10c to 400, while Sky TV eased 1c to 410.

Smaller companies were a little brighter with their capital index adding 9.94 points, or 0.20 per cent, to 5078.30.

- NZPA