MARKET CLOSE: NZ shares fall as greenback view spur offshore selling

Thursday 19th May 2016

New Zealand shares fell from a record high as speculation about a Federal Reserve rate hike next month drove up the US dollar and prompted some offshore funds to trim their investments. Auckland International Airport, Meridian Energy, and Genesis Energy led a late selloff.

The NZX 50 fell 79 points, or 1.1 percent, to 6903.63. Within the index, 33 stocks fell, 12 rose and five were unchanged. Turnover was $215 million.

Stock markets were broadly weaker across Asia after the minutes of the last Federal Open Market Committee meeting showed an interest rate hike in the US next month was possible, provided economic data plays out as expected. In the local market, offshore investors sold companies typically held for their relatively attractive dividend yield, local market participants said.

"If rates are going higher then maybe the US dollar is going to be stronger and typically offshore funds would sell assets and bring the money back home," said James Lindsay, senior portfolio manager at Nikko Asset Management. There was "very heavy offshore selling" in the 30 minutes before the market closed, he said.

Auckland Airport dropped 4.2 percent to $6.37 while Meridian fell 3.8 percent to $2.685 and Genesis declined 3.3 percent to $2.05.

A2 Milk fell 6.4 percent to $1.61, leading the index lower, which Lindsay said mirrored a sharp drop in shares of Australian companies which had enjoyed a similar rally on their prospects in China, including vitamin maker Blackmores, down 5.9 percent to A$157.11 on the ASX today, and Bellamy's Australia, which fell 4.6 percent to A$10.26.

Orion Health Group fell 3.1 percent to $4.69 and Xero declined 2.7 percent to $16.92.

Infratil fell 2.8 percent to $3.28 after the Wellington-based investor said it will spend A$392 million for a 48 percent stake in Canberra Data Centres, teaming up with Australian government pension fund provider Commonwealth Superannuation Corp to buy the data centre business.

Goodman Property Trust fell 0.4 percent to $1.365 after posting a 4.2 percent gain in annual earnings as the country’s second-biggest listed property investor benefited from cheaper interest costs.

Rakon dropped 9 percent to 25 cents after the high-tech components manufacturer, turned to an annual loss of $1.7 million, saying telecommunications companies pulled back infrastructure spending, hurting sales at its largest unit.

Coats Group was unchanged at 63 cents after the UK-based thread-maker reiterated its guidance for a “modest” increase in annual earnings before one-time items and affirmed plans to delist from the NZX and the ASX and keep its London Stock Exchange listing.

Ryman Healthcare fell 1.3 percent to $9.60 ahead of its full-year results tomorrow. Metro Performance Glass rose 2.2 percent to $1.86 and Summerset Group Holdings rose about 2 percent to $4.69. Contact Energy gained 0.4 percent to $5.39.

Nikko's Lindsay said Summerset has benefited from signs of a pick-up in the Auckland housing cycle, as re-sales of occupation rights in its retirement villages are tied to the housing market. "It has been developing well and is emulating "the successful operations of Ryman."

He said Contact gave an upbeat presentation at the recent Macquarie investor conference and its customer numbers have stabilised.

BusinessDesk.co.nz

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