MARKET CLOSE: NZ shares follow Australia lower as Westpac earnings miss expectations

Monday 6th November 2017

New Zealand shares fell, led by Westpac Banking Corp after the Australian lender's earnings missed expectations, weighing on other dual-listed financial services firms including Australia & New Zealand Banking Group and AMP.

The S&P/NZX 50 index slipped 11.49 points, or 0.1 percent, to 8,053.63. Within the index, 20 stocks fell, 21 rose, and nine were unchanged. Turnover was $105 million.

New Zealand's benchmark index followed the S&P/ASX 200 index down as dual-listed Westpac posted a 3 percent increase in annual profit to A$8.06 billion, missing expectations for stronger earnings growth. The dual-listed lender's New Zealand division posted flat earnings, buoyed by a reversal of year-earlier charges on bad debt.

Westpac fell 2.6 percent to $36.05 on the NZX, leading the market lower, while ANZ declined 0.4 percent to $33.08 and AMP decreased 0.2 percent to $5.59.

"There was a bit of expectation going into the result," said Shane Solly, a portfolio manager at Harbour Asset Management. "It wasn't bad, it just wasn't good enough."

Solly said trading across Australia and New Zealand was relatively quiet, with some investors likely to have taken a long weekend ahead of the Melbourne Cup tomorrow, known as 'the race that stops a nation'.

A2 Milk Co fell 2.1 percent to $7.98. The milk marketing firm has soared about 283 percent so far this year after securing Chinese regulatory approval to sell its brands into the world's most populous nation, but has since tempered some of those gains. Processing partner Synlait Milk dropped 1.9 percent to $7.85.

Xero declined 2 percent to $34.05 ahead of the software developer's first-half earnings on Thursday. Solly said investors are increasing their scrutiny of the firm as it gets nearer to profitability.

Metro Performance Glass posted the biggest gain on the benchmark, rising 3.3 percent 94 cents. The glass processing firm slumped to a record low last week as investors continued to question its ability to widen margins after several years of underperformance. Fletcher Building, another construction firm that's been beaten up for falling short of expectations, rose 0.1 percent to $7.19.

Trustpower rose 2.4 percent to $5.97 after the electricity generator-retailer posted an 80 percent gain in first-half profit as North Island production was stoked by favourable weather swelling hydro-lakes in those areas. Controlling shareholder Infratil, which reports on Friday, gained 0.8 percent to $3.255.

Other companies reporting this week include Z Energy, which gained 1.1 percent to $7.24, and Goodman Property Trust, which was down 0.8 percent to $1.30.

Mercury NZ was unchanged at $3.36 ahead of tomorrow's annual meeting, while NZ King Salmon Investments slipped 0.4 percent to $2.29 before its meeting.

IkeGPS gained 6.7 percent to 32 cents after announcing an upgraded sales account for its IKE4 platform which will deliver $450,000 of subscription revenue over the next three years from that customer.

Fonterra Shareholder Fund units rose 0.6 percent to $6.32 after Fonterra Cooperative Group bought into a US joint venture to secure whey-protein concentrate supply in North America.

Among blue-chip stocks, Fisher & Paykel Healthcare increased 0.9 percent to $13.07, Auckland International Airport slipped 0.5 percent to $6.165, Contact Energy declined 0.4 percent to $5.75, Mainfreight gained 0.6 percent to $24.75, and Spark New Zealand decreased 0.8 percent to $3.61.

(BusinessDesk)

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