Air NZ shares drop but market rises
Investors largely took the airline's $189 milion move into the Australian market in their stride.
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Scrutiny Week
The New Zealand sharemarket posted modest gains while other markets lost ground.
Investors largely took a move into the Australian market by Air New Zealand in their stride. Air NZ shares closed down 2c at 142 but traded as low as 140 after the airline spent $189 million on a 14.9% stake in Australian airline Virgin Blue.
"Investors will be hoping this investment in the Australian market does not turn out the way the last one did," said Grant Williamson, director of Hamilton Hindin Greene. Air NZ previously invested in Ansett, which collapsed.
Mr Williamson said the investment was a surprise but Air NZ had a strong balance sheet and could afford it.
The shareholding provided closer ties with Virgin Blue. Its developing alliance with the Australian airline gave Air NZ indirect access to the Australian domestic market.
"Everyone realises Air NZ does need to develop because the New Zealand market is very small," Mr Williamson said.
The benchmark NZX-50 closed up 13.436 points, or 0.4%, at 3352.722. Turnover was worth $113.36 million, of which $61 million was in Telecom shares. There were 30 rises and 38 falls among the 110 stocks traded.
Among the leaders, Fletcher Building fell 2c to 777, Telecom rose 4c to 231 and Contact Energy rose 7c to 630.
Tourism Holdings rose 2c to 75, Steel & Tube rose 6c to 227, Fisher&Paykel Healthcare rose 7c to 320 and the appliances stock rose 1c to 57.
Methven rose 2c to 169, Nuplex rose 3c to 358 and Sanford rose 1c to 472.
Michael Hill fell 2c to 89, SkyCity fell 2c to 324 and Ebos fell 4c to 736. Auckland Airport fell 1c to 225 and Hellaby fell 1c to 221. Restaurant Brands fell 1c to 258.
On Wall Street, stocks fell as lacklustre technology and materials companies' earnings failed to live up to heightened expectations, threatening to short-circuit a seven-week rally.
The Dow Jones Industrial Average dipped 0.02% to 11,822.80, the S&P 500 500 lost 0.13% to 1280.26 and the Nasdaq Composite fell 0.77% to 2704.29.
NZPA
Fri, 21 Jan 2011
Fri, 21 Jan 2011
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Air NZ shares drop but market rises
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