MARKET CLOSE: NZ shares sold off as most regional markets fall

Friday 4th September 2015

New Zealand shares fell to their lowest level this year as offshore volatility weighed on sentiment again with markets across Asia weaker, with the exception of Australia.

The S&P/NZX 50 Index fell 26.4 points, or 0.5 percent, to 5543.28. Within the index, 23 stocks fell, 16 rose and 11 were unchanged. Turnover was $143 million.

Japan's Nikkei 225 Index down 2.5 percent and Hong Kong's Hang Seng Index down 0.6 percent, although Australian stocks rose, with the S&P/ASX 200 Index gaining 0.2 percent at 5pm NZT. An uncertain outlook for China's economy spooked investors and weighed on equities. Meanwhile, the possibility the US Federal Reserve will begin hiking rates this month, which reduces the attraction of dividend paying stocks, also dampened demand for equities.

Australian banking stocks did not fare so well and dual-listed Westpac Banking Corp led the New Zealand benchmark index lower, down 3.5 percent to $32.57. Australia New Zealand Banking Group fell 2.5 percent to $29.50. Heartland New Zealand declined 1.7 percent to $1.13. Metlifecare, the retirement village operator, slipped 1.7 percent to $4.18. Telecommunications provider Spark New Zealand fell 1.3 percent to $3.17.

"It's a combination of things. There's China, although a fair bit of that's played out really in terms of their own market, but the fear is more their own economy," said Matthew Goodson, managing director at Salt Funds Management. "At the same time we're seeing the US market start to focus on the possibility of a September rate hike, which appears to be a fifty-fifty call at the moment."

"We've seen a decent step up in volatility. That alone appears to have triggered a degree of selling. There's been a lot of money in New Zealand chasing high yields and perhaps some of that money is returning to whence it came," Goodson said.

Sky TV declined 3.2 percent to $4.58, in what Goodson described as "an extraordinary sell-off" after it reported a mixed result on Aug. 21, with profit rising 6.4 percent on falling subscriber numbers as new digital platforms eat into its traditional dominance of the pay television market. Sky TV shares went ex-dividend earlier this week, explaining some of a 7.5 percent fall for the week.

"It's continuing an extraordinary sell off. It was over $6 just several weeks ago," Goodson said. "The result largely met expectations but what was concerning was the absence of subscriber growth. We're certainly seeing overseas a lot of cord cutting."

Z Energy rose 0.2 percent to $5.85. The service station chain floated by Infratil and the New Zealand Super Fund two years ago warned it may face millions of dollars of additional costs as the Customs Service seeks to claw back excise duties stretching over the past three decades on leftover fuel in a pipeline from the Whangarei refinery.

Outside the benchmark index, Pumpkin Patch rose 1.4 percent to 14.2 cents after it announced it has appointed Dave Foster as its chief financial officer to replace Steve Mackay, who quit the ailing children's clothing chain after less than a year.

Evolve Education Group fell 4.3 percent to 90 cents. The childcare operator, which listed in December, affirmed its prospectus guidance at its annual meeting.

On the New Zealand Alternative Index, Pushpay Holdings rose 0.9 percent to $5.45. The mobile app payments developer plans to pursue sales in Canada, expanding its drive into North America's so-called "faith-based market" of some 329,000 churches.

BusinessDesk.co.nz

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