Market falls on Cyprus bailout fears

ELOISE GIBSON
Last updated 18:11 18/03/2013

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The New Zealand sharemarket fell today as uncertainty over the impact of a proposed bank bailout for Cyprus spooked equities investors, not helped by a disappointing result locally from Pumpkin Patch and sell-down of Summerset shares.

The benchmark NZX50 got off to a bad start for the week, falling 46.03 points or 1.04 per cent to 4341.02 on relatively low volumes of 29 million shares sold.

29 stocks rose and 9 fell.Grant Williamson, director of Hamilton Hindin Greene, said nervousness about the situation in Cyprus created downward pressure on equities here and in Australia, with some investors deciding to take profits while they could. Cypriots made a run on the banks in reaction to the controversial proposed conditions of the bailout, which included a 10 per cent tax on deposits, breaking with previous EU practice that depositors’ savings would not be touched.

Reuters reported that Cyprus’s government was working on a proposal to soften the blow of a bank deposit levy on smaller savers ahead of a parliamentary vote.Williamson said the downward pressure on the New Zealand stock market was exaggerated by disappointment with kids’ clothes company Pumpkin Patch and a large sale of shares in Summerset, the listed retirement village operator.

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Some investors would have been selling other stocks to buy Summerset shares, he said. Quadrant, a private equity firm, is selling a third of its 56 per cent stake and Summerset has been placed in a trading halt for up to two days to enable the selldown.

Children’s clothing retailer Pumpkin Patch led decliners on the NZX50, falling 5.3 per cent to $1.25 after a result that disappointed investors for its lack of improvement. Pumpkin Patch reported a $4.7 million first-half net profit but sales slipped on subdued trading and the late arrival of summer stock.

The result was a dramatic turnaround from the $30m loss Pumpkin Patch reported for the same period last year but the improvement was largely due to reorganisation costs and store closures. The company said revenue also fell 5 per cent to $153.1m.

Next on the list of decliners was heavyweight stock Fletcher Building, the country’s biggest construction firm, which fell 3.83 per cent to $8.80.

The third biggest decliner was Vital Healthcare Property Trust, the specialist investor in medical clinic real estate, which fell 3.6 per cent to $1.34.Xero also fell 2.34 per cent to close at $10.45 after chief executive Rod Drury downplayed the possibility of Xero listing on Nasdaq soon and said investor interest was probably behind its recent strong sharemarket run.

Leading the gainers was Oceanagold Corp, the miner which operates the Macraes and Reefton Goldfields, which rose 5.05 per cent to $3.33.

The next biggest gainer was PGG Wrightson, the rural services company, which rose 0.37 per cent to $2.78.

Telecom, the country’s biggest phone company, rose 2.24 per cent to $2.28.

The kiwi dollar stabilised during the day to close almost unchanged against the greenback at US82.32c, up marginally from US82.30 cents at 8am.

The New Zealand dollar had tumbled over the weekend as the European Union’s €10 billion (NZ$15.8b) bailout of Cyprus sent global risk sentiment spiralling downward.

The kiwi was up to 75.70 on the Trade Weighted Index of major trading partners’ currencies from 75.5.

On the crosses, the kiwi recently traded at 79.45 Australian cents, down from A79.54 at 8am and 77.96 yen, down from 78.80 yen. It closed at 63.77 euro cents, up from 63.58 euro cents, and 54.49 British pence, up from 54.37p earlier.

The 90 day bank bill rate was 2.67 per cent.

- BusinessDay.co.nz

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