May 25 () – New Zealand shares fell, as Telecom Corp. sank to a new two-decade low, leading the local bourse lower as resurgent fears about Europe’s debt crisis and signs of increased tensions on the Korean peninsula sapped investors’ risk appetite.
The NZX 50 Index fell 57.39, or 1.9%, to 3003.82, the lowest close since late July. Within the index, 35 stocks fell, just two rose and 13 were unchanged. Turnover was $94.7 million.
Shares tumbled again across Asia, with Japan’s Nikkei 225 Index dropping 3.3% and Hong Kong’s Hang Seng down 2.4% as news of wobbly Spanish banks stoked fears of the region’s debt woes and after reports that North Korean leader Kim Jong Il prepped his military to be battle ready last week. South Korea says the North sunk one of its naval vessels.
“Investors are focusing on all the negatives at the moment,” said Keith Poore, head of investment strategy at AXA Global Investors. “It is all geopolitical and financial market risk.”
“At this stage we don’t think there’s going to be systemic issues like there was with the global financial crisis and the U.S. bank writedowns,” Poore said. The slump in equity markets means “stocks become more attractive.” AXA is overweight riskier assets, predominantly in emerging markets, he said.
Telecom fell 5.6% to $1.85. The government yesterday scotched reports it would take a stake in Telecom’s Chorus network business to allow the company to fully participate in its $1.5 billion broadband rollout. The broadband plan threatens to erode Telecom’s market share.
Cavalier Corp., the carpet manufacturer, fell 5.5% to $2.25 and Nuplex Industries, the specialty chemicals maker, dropped 2.3% to $2.99.
NZ Farming Systems Uruguay, which develops dairy farms in South America, was one of the two gainers today, climbing 4.9% to 43 cents after Fonterra Cooperative Group lifted its forecast for next year’s milk payout, stoking optimism for higher global dairy prices.
Fonterra lifted the opening milk price forecast 50 cents to $6.60 per kilogram of milk solids, and 30 to 50 cents per share of forecast distributable profit and chairman Henry van der Heyden said if international dairy prices and foreign exchange rates stayed at today’s level, the pay-out could be in excess of $8.
Michael Hill International, the jewellery chain, rose 1.5% to 69 cents.
National Property Trust fell 4% to 48 cents after the property investor said its net loss narrowed to $13.2 million in the 12 months ended March 31, from a loss of $21 million a year earlier. The trust met its forecast dividend distribution of 4.5 cents a unit, including a final payment of 1.125 cents, and said it expects the payment to be maintained at that level in 2011.
AMP Ltd., Australia’s largest provider of pension plans, fell 3.3% to $6.72, tracking declines in financial on the ASX. Westpac Banking Corp. fell 2.8% to $27.50 on the NZX today.
Warehouse Group, the biggest retailer on the NZX, fell 3.3% to $3.52. Auckland International Airport, which yesterday reported a drop in visitors from Australia, the biggest source of tourists, declined 3.2% to $1.83.
Fletcher Building, New Zealand’s biggest building products company, fell 2.7% to $7.61, a three-month low.
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