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MARKET CLOSE: NZ shares fall as Turkey woes ripple through markets; blue chips include F&P, Fletcher drop

Monday 13th August 2018

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New Zealand shares fell in a global rout as fears over the Turkish economy and its potential threat to the European banking system weighed on risk-sensitive assets and emerging markets in particular. Blue-chip stocks including Fisher & Paykel Healthcare and Fletcher Building declined. 

The S&P/NZX 50 index dropped 65.57 points, or 0.7 percent, to 8,945.04. Within the index, 33 stocks fell, 13 gained, and four were unchanged. Turnover was a smaller than usual $53.9 million. 

Asian stock markets followed Wall Street lower after US President Donald Trump threatened to impose steel tariffs on Turkey, raising investors' fears about the Middle Eastern nation at a time when it's already grappling with high inflation. Emerging markets were hardest hit by the bout of risk aversion, and in Asia, Indonesia's Jakarta composite index down 3.3 percent posted the steepest decline in afternoon trading. 

"Nervousness about growth is starting to gather a little bit offshore with the news out of Turkey and the issues it's facing - it's currency fell through the floor," said Grant Williamson, a director at Hamilton Hindin Greene in Christchurch. "We've had some flow-on effect to this market and investors are taking a little bit off the table." 

Declines on the local market were widespread across growth-orientated stocks, defensive dividend plays and blue-chip companies. Synlait Milk led the market lower, down 3.3 percent to $10.45, followed by F&P Healthcare down 2.4 percent to $14.55, and Sky Network Television down 2.3 percent to $2.57. Dual-listed banks Westpac Banking Corp fell 2 percent $32.40 and Australia & New Zealand Banking Group declined 1.8 percent to $32.15. 

Pushpay Holdings dropped 1.9 percent to $3.61, while Fletcher Building fell 1.7 percent to $6.80 and Ryman Healthcare declined 1.3 percent to $12.88. 

"Some of the big name stocks are under a bit of pressure today as we approach reporting season," Williamson said. 

Freightways slipped 0.6 percent to $7.75 after reporting a 2.1 percent increase in annual profit and signalling expectations for earnings growth in the coming year. The courier and information management firm made two small acquisitions since the June 30 balance date and is open to more M&A to drive further expansion. 

"The result was relatively solid showing a little bit of growth - nothing too significant," Williamson said. "Investors are going to be looking for what the directors are saying going forwards - business confidence has been declining for a wee while." 

Contact Energy declined 0.7 percent to $5.72 after the electricity generator-retailer reported a 4 percent decline in annual earnings, and said it was aligning its commercial and industrial sales more closely with generation. The power company expects to roll out new products for its mass-market retail base in the near future. 

Scales Corp fell 0.7 percent to $4.59 after the agriculture business sold its Liqueo bulk liquid storage unit for $20 million, which it will use for future M&A. 

Arvida Group was the biggest gainer on the day, up 1.5 percent to $1.35, followed by Comvita which gained 1.2 percent to $5.75. Trustpower rose 0.9 percent to $5.75. 

Among companies reporting tomorrow, Summerset Group Holdings fell 0.4 percent to $7.72 and PGG Wrightson dropped 1.5 percent to 67 cents. 

Outside the benchmark index, ikeGPS dropped 7.4 percent to 50 cents after saying it will need more working capital to fund expansion plans for its IKE Analyze product after winning two new contracts. 

A2 Milk Co was unchanged at $10.77, Auckland International Airport declined 0.4 percent to $6.87, Air New Zealand fell 0.9 percent to $3.33, Meridian Energy decreased 0.5 percent to $3.165, and Spark New Zealand fell 0.8 percent to $3.825. 


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