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Monday 8 November 9:55 AM
NZ shares soften, Telecom weakens furtherWELLINGTON, Nov 8 (Reuters) - New Zealand shares started softer on Monday, as top stock Telecom Corp (NZSE: TEL) continued to struggle in the wake of its first quarter result. The benchmark NZSX-50 Index .NZ50 slid 6.50 points, or 0.23 percent, to 2,866.40, extending Friday's loss which followed a seven-day winning streak. Turnover totalled NZ$26 million ($18 million) by 11:05 a.m. (2205 GMT), led by Telecom's NZ$18 million worth of shares. "It's pretty much all a Telecom story," said First NZ Capital broker Don Lewthwaite. Telecom, New Zealand's largest listed company with a 26-percent weighting in the NZSX-50 Index, shed as much as seven cents and last traded down three cents at NZ$5.80. Telecom posted a 19-percent rise in first quarter profit and forecast it would meet an 8-percent increase in annual earnings. Brokers said the subsequent sell-off appeared to be a case of 'buy the rumour, sell the fact', noting that the stock had run up 2.4 percent in the four sessions prior to the result release. "In our view, the near-term investment case to hold TEL does not look that compelling. Earnings growth over the next year is likely to be held back by opex investments that are unlikely to deliver profit growth for 12 months or so," Goldman Sachs JBWere said in a research note. However, Telecom's share price should be underpinned by its dividend, the brokerage added. Elsewhere, the market was relatively quiet. Fisher & Paykel Healthcare FPH.NZ firmed four cents to NZ$3.14 -- its highest level since January 2002 -- ahead of its first-half result on Wednesday. Fletcher Building FBU.NZ, which holds its annual meeting on Tuesday, was two cents higher at NZ$5.65. A 2.7-percent fall in third quarter same-store sales prompted investors to slice three cents, or 2.1 percent, from Briscoe Group's BGR.NZ shares, which last traded at NZ$1.37. The retailer said profitability had been largely static compared with a year ago, and the extent of its recovery from a profit fall in the first half would depend on Christmas trading. Rival retailer The Warehouse WHS.NZ was also three cents lower, at NZ$4.04, on the eve of its first quarter sales release. Fund manager and insurer Tower TWR.NZ gave up four cents to NZ$2.40, and Fisher & Paykel Appliances FPA.NZ fell two cents to NZ$4.18. The softer New Zealand market was in contrast to U.S. share markets, which extended their post-election rally after a report showing strong jobs growth boosted hopes that the economic recovery is taking hold. The Dow Jones industrial average .DJI rose 0.7 percent to 10,387.54, while the Nasdaq Composite Index .IXIC gained 0.8 percent to 2,038.94. It was the highest close for both indices since June 30. ($1=NZ$1.44)
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