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MARKET CLOSE: NZ shares fell on concerns about stalling global growth

Wednesday 2nd October 2019

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(Oct. 3, 5:48 PM) New Zealand shares played follow-the-leader, following Wall Street lower after poor US manufacturing data highlighted the risks to the global economy.



The benchmark S&P/NZX 50 Index fell 45.35 points, or 0.4 percent, to 10,951.64. Within the index, 10 stocks rose, 34 fell and 6 were unchanged. Turnover was $121.7 million.



The broad measure of US stocks, the S&P 500 Index, shed 1.23 percent overnight and markets throughout Asia were following it lower today.



The US Institute for Supply Management’s factory index fell in September to its lowest level since June 2009 and followed disappointing manufacturing data from Europe and China, suggesting the US-China trade war is denting world growth.



New Zealand equities manager at JB Were, Rickey Ward, says trading today was quiet because of school holidays and because those at work are busy writing their September quarter reports.



Some of the larger, high-yielding blue chip stocks that pay steady dividends and have been benefiting from falling interest rates led the market lower such as Goodman Property Trust, Contact Energy and Meridian Energy with strong volumes traded.



Goodman units fell 1 cent, or 0.45 percent, to $2.21 with more than 3 million shares traded, making it the most heavily traded stock today. But its shares are still up more than 44 percent in the past 12 months compared with the NZX 50's 17 percent gain.



Contact shares eased 5 cents, or 0.58 percent, to $8.53 with nearly 700,000 shares traded but are up about 45 percent from a year ago.



Meridian shares slipped 3 cents, or 0.57 percent, to $5.24 with 1.9 million shares traded and they have gained about 62 percent in the last 12 months.



Stocks linked to housing markets like Ryman Healthcare and Summerset both fell, Ryman down 12 cents, or 0.9 percent to $13.27 and Summerset losing 17 cents, or 2.55 percent, to $6.50.



"There are question marks over housing markets and interest rates," Ward says.



As well as operating retirement villages in New Zealand, both companies have moved across the Tasman to start villages in the Victorian market.



Ryman opened its first village in Melbourne in 2014 and purchased its 10th site in the city in May this year while Summerset announced the purchase of its first land in Melbourne last month.



New Zealand house prices rose 2.9 percent in the year ended August but prices in the largest city, Auckland, were down 1.5 percent. Australian house prices rose 0.9 percent in September but are still down 3.9 percent from a year ago. 



Fletcher Building also had a poor day, shedding 2.71 percent to $5.02.



The stand-out stock today was Infratil, which gained  9 cents, or 1.85 percent, to $4.96 and it was also the second-most heavily traded with 2.66 million shares changing hands.



The Fonterra Shareholders Fund was also among the day's gainers, up 3 cents, or 0.86 percent to $3.51, but that's in the context of the stock having fallen about 28 percent in the last 12 months.



Last month, Fonterra posted a net annual loss attributable to shareholders of $557 million, widening from its maiden loss of $221 million a year earlier.



Ward says the result was better than the market had expected but, because the co-operative had guided down expectations so much, "that's a poor reason to celebrate."



Fonterra "has to get its house in order" because for most New Zealand institutional investors, the fund is "almost univestible."



The company has to improve its governance and sell assets to reduce debt.



"The governance structure has always been an area of debate and utter dislike," Ward says.



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