MARKET CLOSE: NZ shares fall as Westpac punished on first-half results; ANZ, Meridian, Kathmandu decline

Monday 2nd May 2016

New Zealand shares fell after Westpac Banking Corp posted earnings that missed estimates on increased impairments. Australia & New Zealand Banking Group, which also reports this week, and Kathmandu Holdings were among leading decliners.

The S&P/NZX 50 Index fell 28.76 points, or 0.4 percent, to 6,791.82. Within the index, 31 stocks fell, 14 rose and four were unchanged. Turnover was $122 million.

Westpac dropped 5 percent to $32.34 and ANZ Bank fell 4.2 percent to $25.53 on the NZX, pacing declines on the S&P/ASX 200 Index. Westpac posted first-half cash profit, which excludes one-time items, of A$3.9 billion. While that was up from A$3.78 billion a year earlier it missed analyst estimates as the charge for bad debts surged to A$667 million, a six-year high.

"Yes it did miss (estimates) but not by a huge amount," said David Price, a broker at Forsyth Barr. "The Australian market is fairly brutal when companies don't make forecast."

Kathmandu, the outdoor clothing retailer that counts Australia as its largest market, fell 1.9 percent to $1.56.

Meridian Energy fell 3.6 percent to $2.555, leading declines among utility stocks, Mighty River Power, which is to change its name to Mercury Energy in line with its retail division, fell about 3 percent to $2.93. TrustPower fell 1.3 percent to $7.65, Vector dropped 1.2 percent to $3.31 and Contact Energy fell 0.2 percent to $5.07.

Z Energy, which last week got antitrust approval to buy rival petrol station chains, rose 0.5 percent to $7.88.

Fonterra Shareholders' Fund rose 0.3 percent to $5.83. This week's GlobalDairyTrade auction is expected to record another small gain in prices of dairy products.

Among other large-cap companies, retirement village operator Summerset Group fell 1.8 percent to $4.36 and retailer Warehouse Group declined 1.5 percent to $2.72. Xero, the cloud-based accounting service, fell 1.2 percent to $16.20 and A2 Milk fell 1.1 percent to $1.75.

Price said there has been "indiscriminate buying from offshore" of New Zealand's biggest listed companies and today's selloff was just as widespread. Volumes were relatively light and may remain light this week as many fund managers head to Australia for a Macquarie investment conference, where companies are invited to give presentations.

Price said the conference often becomes the venue for "confessions season" with some companies choosing to give guidance or make other comments about their performance.

Investors were also conscious of the kiwi dollar having gained back up to 70 US cents, creating an extra drag for exporters and companies getting much of their revenue offshore. Fishers & Paykel Healthcare fell 0.3 percent to $9.12.

BusinessDesk.co.nz

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