MARKET CLOSE: NZ shares drop, Tegel and Vital Healthcare dip, A2 Milk gains

Tuesday 21st June 2016

New Zealand shares dropped, defying global trends, as a lack of news and Brexit nervousness kept the market quiet. Tegel Group and Vital Healthcare Property Trust declined while A2 Milk rose.

The S&P/NZX 50 Index fell 30.15 points, or 0.4 percent, to 6,839.39. Within the index, 24 stocks rose, 20 fell and six were unchanged. Turnover was $144 million.

"The market's fall is unusual because there was an almighty rally overnight from the international markets, in particular the UK and Europe, and a material rally out of the US - we're bucking the trend by being in the red," said Mark Lister, head of private wealth research at Craigs Investment Partners. "We haven't suffered the way markets like Europe or the UK have over the last several days, so we haven't participated in the rebound today."

That rebound was due to Brexit fears easing overnight. Local market participants have been happy to bide their time due to the uncertainty ahead of Friday morning's vote (NZ time), combined with a dearth of stock-specific news, Lister said.

"The Brexit vote is keeping people nervous and keeping markets volatile, and it's going to be close from everything we can see," Lister said. "A lot of investors seem happy to sit on the sidelines rather than make any big bets while you've got that looming later in the week."

Tegel Group fell 0.6 percent to $1.67. The poultry group, which was taken public by private equity firm Affinity Equity Partners in April, reported annual sales and profit ahead of its prospectus forecasts and said it was on track to achieve its targets for the current year.

"It was pretty much in line with expectations, very marginally higher - there was nothing really there to provide drivers one way or another," Lister said. "When you're a new company there's always going to be a bit of a spotlight on you when you report your first results, I don't think anyone expected them to deviate too much."

Vital Healthcare Property Trust was the worst performer, down 4.1 percent to $2.13. The trust plans to raise $160 million to pay down debt, giving it headroom to pursue a pipeline of developments on both sides of the Tasman. It will sell shares at $2.08 apiece in a two-for-one pro rata renounceable rights offer. Lister said the sell-off was normal as the proposed share price was below the current share price.

Spark New Zealand shed 2.9 percent to $3.38, Kathmandu Holdings fell 2.1 percent to $1.39, and Ebos Group dropped 1.5 percent to $16.05.

A2 Milk gained 2.3 percent to $1.81. Last Wednesday the milk marketing company raised its full-year guidance and said it is well placed to cope with changes to infant formula regulations in China. It has gained 15 percent since then, though is below its record of $2.27 from last December.

"It was one of the strongest movers last week after the profit upgrade, that just continues to respond in the wake of that update," Lister said.

Orion Health gained 1.7 percent to $4.89. The health software developer said it has signed an agreement with Minnesota state-certified health information organisation (HIO) Koble-MN to use its Amadeus precision medicine platform for an undisclosed amount.

Westpac Banking Corp gained 1.8 percent to $31.19 and Comvita rose 1.7 percent to $12.30.

BusinessDesk.co.nz

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