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MARKET CLOSE: NZ shares join global decline as trade jitters re-emerge; Gentrack, F&P Health fall

Wednesday 5th December 2018

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New Zealand shares fell for a second day as doubts about the ceasefire in the US-China trade stoush weighed on global markets, hitting growth stocks and exporters such as Gentrack Group and Fisher & Paykel Healthcare. 

The S&P/NZX 50 index dropped 84.23 points, or 1 percent, to 8,781.53. Within the index, 38 stocks fell, seven gained and five were unchanged. Turnover was $107.1 million. 

Stock markets across Asia followed Wall Street lower, with Australia's S&P/ASX index down 1.1 percent in afternoon trading and Hong Kong's Hang Seng falling 1.6 percent. Volatility re-emerged as investors questioned the details about the US-China truce.

US President Donald Trump fuelled that unease when he tweeted his willingness to impose new tariffs if a deal can't be reached. US markets will be closed for a national day of mourning to mark former President George HW Bush's death, which may have exacerbated the 3.1 percent drop on the Dow Jones Industrial Average overnight. 

"It's not too bad given it was such an ugly day on the Dow," said Mark Lister, head of private wealth research at Craigs Investment Partners. "For all that, US shares are still up quite a bit from the lows they got to back in October." 

Utilities software developer Gentrack, which has extensive operations in the UK and Europe, led the market lower, down 4 percent at $5.52 in light trading, continuing its weakness since acknowledging concerns about its growth outlook. 

Fisher & Paykel Healthcare, which has manufacturing operations in Mexico and derives more than half its earnings in US dollar, fell 3.5 percent to $12.55. Some 1.2 million shares changed hands, almost twice its 671,000 average. 

Lister said growth stocks typically bear the brunt when markets underperform. However, he said many hadn't fared too badly, singling out A2 Milk Co as holding up reasonably well. The milk marketing firm decreased 1.4 percent to $11.06 on slightly lighter volumes than usual, while its supplier Synlait Milk dropped 3.1 percent to $9.45 in thin trading. 

Heartland Group dropped 3.3 percent to $1.47 on smaller than average volumes. Australian data today showed slower-than-expected growth across the Tasman, where Heartland is seeking to expand its reverse mortgage business. 

Dual-listed lenders Australia & New Zealand Banking Group and Westpac Banking Group fell, with ANZ down 2.3 percent to $27.40 and Westpac declining 2 percent to $26.95. 

Trade Me rose 3.1 percent to $6.24 on a bigger volume than usual of 1.4 million, after receiving a second and more attractive indicative offer from a global private equity firm. Hellman & Friedman is offering $6.45 a share, compared to Apax Partners' $6.40 bid. 

Lister said the second bid wasn't too much of a surprise, and praised Trade Me's board for keeping the door open to other unsolicited bids. 

Spark New Zealand was the most traded stock with 3.9 million shares changing hands, more than its 3 million 90-day average. The stock was unchanged at $4.21. 

Of other stocks where more than 1 million shares were traded, Kiwi Property Group increased 0.4 percent to $1.36, Contact Energy fell 1.9 percent to $5.77, and Argosy Property declined 1.3 percent to $1.14. 

Scales Corp slipped 0.5 percent to $4.38 after raising its interim dividend payment and saying annual earnings may beat expectations. 

Fonterra Shareholders' Fund units were unchanged at $4.71. Fonterra will release its quarterly results tomorrow where it's widely expected to cut its forecast farmgate payout. It will also provide details on its Beingmate Baby & Child Food investment, confirming it had agreed to provisional terms to unwind its Darnum joint venture. 

Outside the benchmark index, Cavalier Corp dropped 11 percent to 56 cents in light trading after the company said restructuring underpinned an increased forecast for first-half earnings, and noting weaker sales in softer market conditions.

(BusinessDesk)

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