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NZ stocks fall, Westpac drops after placement

MARKET CLOSE: NZ stocks fall, Westpac drops after placement

By Jonathan Underhill

Dec. 10 – New Zealand stocks fell for the third day in four as capital raising by Australian banks spurred concern more companies will need to tap the market for cash and ING New Zealand prepared to wind up four funds.

The NZX 50 Index fell 13.162, or 0.5% to 2711.549. Within the index, 23 stocks fell, 13 rose and 14 were unchanged, with turnover of about NZ$73 million. Westpac Banking Corp.’s New Zealand shares led the NZX 50 lower, declining 7.9% to NZ$19.90 after it sold A$2.5 billion of shares at a discount to bolster its capital.

ANZ Banking Group rose 2.7% to NZ$17.20. The S&P/ASX 200 Index gained 1.3% to 3650.2 in late afternoon trading, reversing an earlier decline, after reports showed a surge in consumer confidence and the first increase in home-loan approvals in nine months. Fairfax Media fell 1.3% to A$1.49 after announcing it would temporarily reduce its dividend payout ratio by 20% and confirming Brian McCarthy as CEO, replacing David Kirk, who quit suddenly.

Commonwealth Bank fell about 4% to A$28.81 after announcing plans to raise A$750 million.

The bank capital raisings stoke “the fear that there’s more requirements for capital,” said Barry Lindsay, research manager at First NZ Capital. “It sucks up money for equities that would otherwise flow elsewhere.”

ING New Zealand fell 1.5% to 65 cents after the fund manager announced plans to wind up two distressed credit funds which owe investors more than $500 million and have been suspended for most of the year. ING's shareholders will provide a $100 million loan to provide investors with cash immediately.

Warehouse Group fell 0.3% to NZ$3.27 after announcing it would close its six liquor outlets because of increased costs, the closure of its Extra grocery offering and its inability to gain a licence for its Albany store. The shares have fallen 43% this year.

Fletcher Building rose 0.5% to NZ$5.65. The stock has swung between about NZ$5.40 and NZ$5.75 in the past month after plunging from more than NZ$11 in the past 12 months.

“I believe strongly that the market is trying to find a bit of a floor,” Lindsay said. “I tend to think it’s looking to bottom out. A lot of these share prices are fully reflecting the rather gloomy outlook.”


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