MARKET CLOSE: NZ shares fall; MRP, Genesis drop; A2 declines

Thursday 25th June 2015

New Zealand shares fell as traders weighed whether a regulatory threat was returning to the energy sector. MightyRiverPower, Genesis Energy, Meridian Energy and Contact Energy declined. A2 Milk Company fell as investors looked to crystalise recent gains.

The S&P/ASX 50 Index fell 42.2 points, or 0.7 percent, to 5733.29. Within the index, 27 stocks fell, 15 rose and eight were unchanged. Turnover was $196 million.

Over the weekend, Labour MP Stuart Nash told TVNZ's Q+A he was reviewing, but had not abandoned, the party's controversial plan to further regulate the energy sector in a bid to bring down the country's retail power prices. Eleectricity company shares fell as investors mulled the possibility of future regulation.

Meridian dropped 4.7 percent to $2.05. MRP fell 3.8 percent to $2.55. Genesis declined 4.1 percent to $1.755. Contact slipped 3.7 percent to $4.95.

"One or two politicians are saying New Zealand electricity prices are too high, so that might be starting to have a bit of effect on investors," said Grant Williamson, director at Hamilton Hindin Greene. "In any sector that is regulated investors are always very cautious."

NBR also reported the plans by Todd Energy subsidiary Nova to build a new 100 Megawatt gas-fired power station, which would put further downward pressure on wholesale electricity prices at a time of excess electricity production.

A2 Milk Co led the benchmark index lower, down 5.3 percent to 71 cents, after advancing to a year high on the back of a possible takeover bid by Freedom Foods, which already has a 19 percent interest in the milk marketing company.

"We've still got to wait for more detail around that and there's no offer on the table at this stage so it is pretty early days," Williamson said. "I think a few investors have decided to take the higher price and sell ahead of whatever is going to happen."

Vital Healthcare Property Trust rose 0.3 percent to $1.64. The hospital developer has announced an A$14.5 million project for its South Eastern Private Hospital in Melbourne and is expanding its land base in Newcastle.

Precinct Properties New Zealand gained 0.4 percent to $1.145. The property investor sold another property in Wellington's central business district for $76 million, while saying its latest valuation has bumped up the value of its broader portfolio.

Units in Fonterra Shareholders' Fund, which give holders access to Fonterra Cooperative Group's dividend stream, fell 0.2 percent to $4.91. The world's largest milk exporter had twice as many farms offer to supply milk for a guaranteed price for the upcoming season than last season amid uncertainty about when global milk prices will recover. A total of 45.2 million kilograms of milk solids was offered by 443 farms, exceeding the 40 million kgMS available under the guaranteed price, up from 180 farms in June last year offering to sell 26 million kgMS.

Spark New Zealand, formerly Telecom Corp, rose 0.7 percent to $2.81. Auckland International Airport, the nation's busiest gateway, was unchanged at $4.96. Fletcher Building, the building and construction supplies firm, slipped 2.2 percent to $8.10.

BusinessDesk.co.nz

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