New Zealand stocks fell to their lowest level in four months, as concerns ahead of a key austerity vote in Greece spilled into regional markets. Methven Ltd. led decliners, while Warehouse Group rose.
The NZX 50 Index fell 17.51 points, or 0.5%, to3,438.08, its lowest level since March 30. Within the index, 20 stocks fell, 17 rose, and 13 were unchanged. Turnover was $111.8 million.
Equity markets across Asia were under pressure today with appetite for higher yielding of riskier assets in short supply ahead of a key vote in Greece on Wednesday, when lawmakers will be asked to vote in a package of spending cuts and tax hikes worth 28 billion euros. A failure to pass the measure may result in the country defaulting on its sovereign debt obligations.
In afternoon trade, Japan’s Nikkei 225 Index recently traded 0.8% lower at 9,603.97, Hong Kong’s Hang Seng fell 0.7% to 22,025.354, and Australia’s S&P/ASX 200 fell 0.9% to 2693.2.
“We’re predominantly down on the offshore leads today, although we’ve been relatively resilient compared to markets like Australia,” said Rickey Ward, domestic equities manager at Tyndall Investment Management. “We drew some support because we’re a high income based capital market, with higher dividend yields than our peers.”
Methven, the tapware manufacturer, fell 4% to $1.45 after the company said conditions in its three main markets, Australia, New Zealand and the U.K., would remain challenging in the near term. The company also said it expects to lift net profit by at least 25% to $8.5 million for the year ending March 31, 2012.
Tower Ltd., the general insurer, fell 2.5% to $1.56 after ratings agency Standard & Poor’s said local insurance companies could see reinsurance costs triple as a result of the Christchurch earthquakes.
The announcement comes after Tower last week said it expects costs to balloon by $31 million this year due to the disaster. Of this $7 million to $11 million will be spent on reinsurance excess and additional cover after the latest 6.3 magnitude quake earlier this month.
Telecom Corp., the country’s biggest phone company, fell 2.2% to $2.45.
Warehouse, the country’s biggest listed retailer, rose 2.9%, pacing gainers on the day with the stock gaining after media reports quoted Grant O’Brien, chief executive designate of Australian retail group Woolworths, saying he was still interested in growing its stake in company but has no immediate plans.
“It’s a comment they throw out there just anytime they get asked, but the reality is that it would be a near impossibility for them to make the acquisition,” Ward said. “Even if Stephen Tindall does allow it, Foodstuffs would have a go as well.”
Vital Healthcare Property Trust, the specialist medical property investor, rose 0.9% to $1.19 after the sale of its key Australian tenant saw an A$3.8 million loan repaid early.
The loan to Healthe Care, which had been due to be repaid in 2014, was transferred to the trust as part of last year’s A$164.5 million purchase of 12 hospital and medical properties in Australia. Healthe Care leases nine properties across four states owned by Vital Healthcare.
Tenon Ltd., the wood mouldings manufacturer, was unchanged at 85 cents after it announced that it had signed up to a new US$70 million bank facility to retire existing debt and fund future needs.
Scott Technology Ltd., the Dunedin-based manufacturer, was unchanged at $1.45 after the company said it wants to raise $9.5 million in a discounted 1-for-4 rights issue.
The company is offering a pro rata renounceable rights issue to existing shareholders a $1.20 apiece. That’s a 17% discount to the stock’s closing price on Friday. Subject to stock exchange approval, the rights will trade on the NZX between July 4 and July 28. The offer isn’t underwritten.
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