New Zealand stocks fell to their lowest level in almost two months after Christchurch was struck by a swarm of fresh earthquakes and amid fears the global economic recovery is faltering. Pumpkin Patch led decliners, while SkyCity Entertainment Group rose.
The NZX 50 Index fell 13.94 points, or 0.4 per cent, to 3,476.68, its lowest level since April 20. Within the index, 24 stocks fell, six rose, and 20 were unchanged. Turnover was a weaker-than-usual $67.8 million, with Australian investors on holiday to celebrate the Queen's Birthday.
Investor sentiment, already fragile amid fears the global economy may be stalling on the back of a weak US recovery and Europe's sovereign debt crisis, took another blow today after a 5.5 and 6.6 magnitude earthquake struck Christchurch in quick succession this afternoon. The New Zealand dollar slumped almost 1 US cent on news, falling from 82.11 cents just before the catastrophe, to 81.25 cents before paring declines. It recently traded at 81.33 cents.
Asked today at his weekly press conference whether the government would consider abandoning Christchurch in the wake of the latest disaster, Prime Minister John Key said the situation "wasn't anywhere near that" and he remained totally committed to rebuilding the city.
The impact of the earthquake on the equity market was blunted by the absence of Australian investors, with the ASX closed for a public holiday, said Craig Brown, who helps manage $1.1 billion of New Zealand equities for ANZ subsidiary OnePath New Zealand.
Pumpkin Patch, the children clothing chain, fell 3.5 per cent to $1.12. The stock is rated a "hold" according to a consensus poll of five analysts compiled by Reuters.
Rakon, the manufacturer of electronic components used in cellphones and GPS units, fell 2.8 per cent to $1.04.
Tower, the general insurer controlled by Guinness Peat Group, fell 2.2 per cent to $1.78 amid fears that the latest quakes will extend the company's exposure to the Christchurch catastrophe. GPG fell 2.4 per cent to 81 cents.
Today's events come as Tower took the Earthquake Commission to the High Court over how much it will pay out on claims resulting from the September and February earthquakes in Canterbury and Christchurch.
Telecom, the country's biggest phone company, fell 1.9 per cent to $2.27.
SkyCity rose 2.3 per cent to $3.54, leading gainer on the exchange after the government announced it had selected the casino and hotel operator as the preferred bidder to build a $350 million convention centre in Auckland.
The deal, which will be entirely funded by SkyCity, has drawn criticism for being contingent on a government review of gambling legislation, with critics labeling it as 'legislation for sale'.
"It will be an interesting one for the government as to how they manage people's perceptions of the deal, especially as this is an election year," Brown said. "You get the feeling that unless they get a mandate in November they have the ability to pull the whole project back."
Mainfreight, the trucking company, rose 0.9 per cent to $10.10. The company now has the highest priced stock on the NZX among New Zealand domiciled companies.
Goodman Fielder, the Australian food ingredient manufacturer, rose 0.8 per cent to $1.31.
Fletcher Building, the country's biggest construction firm, rose 0.1 per cent to $8.67.