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MARKET CLOSE: NZ shares mixed, A2, Kathmandu weaken while Investore gains

Tuesday 17th July 2018

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New Zealand shares were mixed, with Kathmandu Holdings and A2 Milk dragging the index lower while defensive stocks such as Investore made gains amidst global uncertainty.

The S&P/NZX50 Index fell 1.42 points, or 0.02 percent, to 8,978.89. Within the index, 30 stocks rose, 17 fell and three were unchanged. Turnover was $92.1 million.

"There were some relatively clear offshore leads overnight that have led to a pretty mixed performance in this part of the world - the US market was down slightly and there was a bit of weakness in some high-flying tech stocks like Netflix," said Mark Lister, head of private wealth research at Craigs Investment Partners.

"All eyes are going to be on some of those heavyweight US companies that are reporting results, and depending how the market reacts to those we'll probably go along for the ride," Lister said. "There's a number of really important ones over the next week or two, it's a little bit quiet on the local corporate front but we seem to be reacting to what's happening offshore."

Kathmandu Holdings was the worst performer, down 2.9 percent to $3.07, while Fletcher Building dropped 2.1 percent to $6.90 and Comvita fell 2 percent to $5.85.

A2 Milk dropped 1.7 percent to $11.10, though the stock fell by as much as 3.7 percent during the day. Synlait Milk, which supplies A2, fell 1.7 percent to $10.88.

"[A2 is] probably dragging the market down. There has been no news there but being a growth stock that's priced quite highly, when you do get a bit of negative sentiment in markets - particularly if it's around some of those high-flying growth companies - then A2 is going to come under a bit more pressure than some of the more defensive, predictable companies," Lister said. "Those two have had such a stellar run that they've come under a bit of profit-taking pressure."

Lister said investors were keen to own defensive, high-yielding stocks "in the face of a little bit more uncertainty, very little inflation, and a very low likelihood of the OCR going up any time soon."

Such stocks include Investore Property, which was the best performer, up 2 percent to $1.52; Property for Industry, which rose 1.2 percent to $1.74; and Genesis Energy, which gained 0.8 percent to $2.48.

New Zealand Refining declined 1.6 percent to $2.48. It has reported negative margins for the first time in five years after a major maintenance shut had to be extended last month. It reported gross margins for May and June of negative 71 US cents a barrel, in contrast to the US$6.82 a barrel achieved for March and April, and the US$7.63 reported for May and June last year.

"It's a bit of a weaker update than the market was expecting, the shutdown looks like it's had a slightly bigger impact than people thought and margins have been a little bit softer as well," Lister said. "There has been incremental bad news that has seen the shares sold off a little bit."


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