MARKET CLOSE: NZ shares fall as A2 extends decline, property stocks lose shine

Thursday 27th September 2018

New Zealand shares fell as A2 Milk Co extended its decline since its chief executive sold down her holding. Rising bond yields also dimmed the lustre of property stocks.

The S&P/NZX 50 index dropped 63.45 points, or 0.7 percent, to 9,286.40. Within the index 36 stocks fell, seven gained and seven were unchanged. Turnover was $120.9 million.

The local market followed Wall Street's lead after the Federal Reserve raised its key interest rate. Global bond yields have been increasing since US President Donald Trump this month introduced smaller tariffs on Chinese goods than earlier feared. New Zealand's 10-year government bond yield has climbed 13 basis points to 2.91 percent in the past fortnight.

Rate-sensitive property stocks were weaker after the Fed's move today and as New Zealand's Reserve Bank held the official cash rate at 1.75 percent. Goodman Property Trust fell 2.2 percent to $1.535, Vital Healthcare Property Trust declined 0.9 percent to $2.12, Kiwi Property Group decreased 0.7 percent to $1.40 and Precinct Properties New Zealand slipped 0.7 percent to $1.44.

"We have seen bond yields rise a little in New Zealand this month and more so globally," said Matt Goodson, managing director at Salt Funds Management. "Their run over the last few days has been a little bit incongruous and they're certainly giving that back in a hurry today."

A2 fell 2.5 percent to $11.55. It's shed 7.7 percent since CEO Jayne Hrdlicka disclosed a share sale at a time when the stock was being added to the FTSE index at the end of last week.

Goodson said the stock has been under pressure since Hrdlicka's sale because she had been upbeat in investor presentations about the company.

"One would hope the board would be having some quite hard words about what on earth went on there and the signal that it sends," he said.

Meridian Energy shed rights to dividends of 11.38 cents per share. It led the market lower, falling 3.6 percent, or 12 cents, to $3.205. Skellerup Holdings declined 2.7 percent, or 6 cents, to 2.14, giving up a 7 cent dividend. Ebos Group fell 0.5 percent to $22.25, or 10 cents, after shedding rights to a 35.5 cent dividend.

NZX posted the biggest gain for the day, up 1.9 percent to $1.10. Tourism Holdings increased 1.2 percent to $5.75 and SkyCity Entertainment Group advanced 1 percent to $3.97.

Among blue-chip stocks, Fletcher Building was unchanged at $6.49, Fisher & Paykel Healthcare slipped 0.3 percent to $14.85, Auckland International Airport decreased 0.5 percent to $7.35, and Spark New Zealand fell 2 percent to $3.93.

Gentrack was unchanged at $7 after Forsyth Barr started covering the stock, rating it an 'outperform' with a target price of $7.90.

Outside the benchmark index, Tilt Renewables was unchanged at $2.33. The independent directors again recommended minority shareholders reject a $2.30 a share offer from Infratil and Mercury NZ, saying the suitors' attempts to undermine the independent adviser valuation wasn't an assessment of the renewable energy company's worth. Infratil fell 1.5 percent to $3.505 and Mercury slipped 0.9 percent to $3.34.

Cavalier Corp dropped 7.6 percent to 61 cents after the carpet maker said it will sell its stake in a wool scouring business at an $11.8 million loss.

(BusinessDesk)

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