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MARKET CLOSE: NZ shares join global lull as investors remain nervous

Wednesday 14th August 2019

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(Aug. 13, 5:44 PM) New Zealand shares joined a global decline as investors remain unnerved by heightened geopolitical tensions. Domestic earnings met expectations but failed to stoke local investor confidence. 

The S&P/NZX 50 Index fell 17.97 points, or 0.2 percent, to 10,854.77. Within the index, 23 stocks declined, 21 rose, and six were unchanged. Turnover was $107.4 million, with five stocks trading on volumes of more than a million shares. 

Stocks across Asia followed Wall Street lower after pro-democracy protests in Hong Kong closed the autonomous region's airport and goaded mainland Chinese officials to dub the demonstrations as the first sign of "terrorism". Hong Kong's Hang Seng Index was down 1.9 percent in afternoon trading, while Singapore's Straits Times Index dropped 0.8 percent and Australia's S&P/ASX 200 Index decreased 0.4 percent. 

"The local market's off in reaction to what's happening offshore - it's not a big decline though," said Grant Williamson, a director at Hamilton Hindin Greene. 

Meridian Energy, the country's biggest listed company, led the market lower, down 2.4 percent at $4.88 on a volume of 1.3 million shares, in line with its 90-day average of 1.4 million.

Of other blue-chip stocks to decline, Spark New Zealand fell 1.1 percent to $4.055 and was the most heavily traded company on a volume of 2.5 million shares, Fletcher Building slipped 0.6 percent to $4.69, Auckland International Airport decreased 0.9 percent to $9.74 and Air New Zealand dipped 0.2 percent to $2.75. 

Kiwi Property Group rose 0.3 percent to $1.64 on a volume of 1.5 million shares and Mercury NZ increased 0.2 percent to $4.98 on a volume of 1 million.

Williamson said the three companies that reported earnings today - NZX, Summerset Group, and PGG Wrightson - largely met expectations.

NZX was unchanged at $1.20 after reporting a 4.3 percent increase in first-half operating earnings and flagging a better result was still to come in the annual result. 

"The share price had been moving up ahead of the result and it's pretty much as the market expected," Williamson said. 

Summerset increased 0.5 percent to $5.87. It reported first-half underlying earnings up 6 percent, and signalled interest in entering Melbourne, where larger rival Ryman Healthcare has branched out. Williamson said investors expect Summerset to improve in the second half of the year but will be watching any foray across the Tasman with interest.

Ryman shares increased 0.2 percent to $13.53, Oceania Healthcare was up 2 percent at $1.04, Arvida Group was unchanged at $1.40 and Metlifecare decreased 0.2 percent to $2.275. 

Outside the benchmark index, PGG Wrightson resumed trading after a 10-for-1 share consolidation. The rural services firm reported a record annual profit due to a one-off gain on the $434 million sale of its seeds division to DLF Seeds, of which it returned $234 million to shareholders. Underlying earnings dropped 29 percent as farmers kept spending in check as they contended with the Mycoplasma bovis outbreak and amid a general malaise in the rural sector. The shares, which were adjusted for the consolidation, dropped 4.2 percent to $2.35. 

Williamson said it's typical for a stock to decline after a share consolidation, and that a number of investors probably took the opportunity to exit after pocketing the capital return. 

SkyCity Entertainment Group posted the day's biggest gain, up 3.1 percent at $4.01 on a volume of 758,000 shares, in line with its 787,000 average. The casino operator is scheduled to report annual earnings tomorrow. 

Williamson said the company's result will be interesting to watch now that SkyCity has sold a number of assets, such as the Darwin casino and its Auckland parking concession. The stock has underperformed the benchmark, with a 13 percent gain so far this year compared to a 23 percent increase for the NZX50. 

Fonterra Shareholders' Fund units recovered some of yesterday's loss, up 1.1 percent at $3.61. Fonterra Cooperative Group yesterday put the kybosh on a dividend this year, saying it will report an annual loss of up to $675 million with impairment charges of more than $800 million worldwide. 

Contact Energy increased 0.7 percent to $8.32 after yesterday reporting a 12 percent lift in annual operating earnings. 

Bank of New Zealand's 2022 bond paying annual interest of 3.86 percent was the most traded debt security on a volume of 593,000. The notes closed at a yield of 1.47 percent, down 1 basis point. 


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