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MARKET CLOSE: NZ shares drop, led by ANZ, Westpac

Friday 1st April 2016

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New Zealand shares fell, dragged down by dual-listed Australia & New Zealand Banking Group and Westpac Banking Group and softness in prices for several leading New Zealand stocks. 

The S&P/NZX 50 lost 44.4 points, or 0.7 percent, to 6,708.02, Within the index, 24 stocks fell, 22 rose and four were unchanged. Turnover was $189.5 million.

The local market faltered after capping off the first quarter yesterday with a 6.8 percent gain for the year so far. The market has rallied after the Reserve Bank's surprise interest rate cut in March but was one of many indices to fall today across Asia. At 5:15 pm local time, Hong Kong's Hang Seng was down 1 percent, Australia's S&P/ASX 200 had fallen 1.7 percent, and Japan's Nikkei 225 was 2.8 percent lower.

"It's probably not a surprise after the good run up to the end of the quarter," said Robert Garden, investment adviser at Craigs Investment Partners. "The local market rallied hard and the hunt for yield is always intense when money's needing to find a home. We're post-reporting season now and the market was quiet for news today, so we've seen it drop a bit."

Warehouse Group gave up rights to an 11-cent interim dividend today, closing at $2.80. 

Fletcher Building fell 3.4 percent to $7.62, and Spark New Zealand dropped 2.5 percent to $3.56.

Dual-listed banks continued the fall which began last Thursday when Australia & New Zealand Banking Group said it would increase its provisions for bad debt by at least A$100 million, on top of the A$800 million it had already anticipated for the first half of 2016. The same day, Westpac Banking Group's Australian chief executive warned the first-half bad debt charge in that division would increase 10 percent “primarily due to pockets of stress in personal loans, particularly in areas like Western Australia."

ANZ shed 2.3 percent to $25.30, and Westpac lost 2.1 percent to $32.80. 

"ANZ's A$100 million increase isn't a lot in the grand scheme of things, but investors are uncertain about whether there will be more bad debt to be provisioned for, particularly in the resources sector," Garden said. "Returns investors get may not be at the level they previously were."

Mighty River Power lost 2.1 percent to $2.86, Auckland International Airport declined 1.7 percent to $6.32, and Argosy Property shed 1.3 percent to $1.17. 

Skellerup Holdings gained most, rising 3.9 percent to $1.33, having fallen 15.2 percent this year. In February, first-half profit edged lower and it pulled back expectations for the full year as weakness in its agricultural business weighed on improved earnings from its industrial unit.

Goodman Property Trust gained 1.5 percent to $1.34, Z Energy rose 1.5 percent to $6.85, and Metro Performance Glass was up 1.2 percent to $1.70. 

Outside the main index, Kirkcaldie & Stains dipped 0.3 percent to $3.10 after the directors recommended shareholders reject veteran corporate raider Ron Brierley's takeover offer. 

Brierley's Mercantile NZ vehicle, with a 6 percent shareholding, is offering $2.75 cash a share for the rest of the company. The shares have nearly doubled in value this year after the company's historic Wellington department store closed down and its assets were prepared for disposal. The board said they believed even in a low-payout scenario, shareholders would be better off waiting for the company to be wound up. Late in the afternoon, Kirkcaldie announced it had not been able to get out of its lease on its Petone premises, at a cost of $1.4 million if left to run to expiry in 2023. The directors said they will make a further announcement next week if their advice to shareholders changes.

Pushpay gained 0.9 percent to $2.30. The mobile payments app developer sold its Run The Red business, a personalised text messaging service for businesses, for $4.5 million, which it will use to expand its core business. Pushpay shares were the subject of an NZX 'please explain' query on Tuesday last week when its shares jumped 39 percent in a day. The company said then that it was compliant with continuous disclosure requirements.

Tegel Group Holdings, the poultry business controlled by private equity firm Affinity Equity Partners, announced it wants to raise as much as $344.4 million in New Zealand's first initial public offering of the year for the NZX main board, by selling between 137.5 million and 192.4 million shares at $1.50-to-$2.50 apiece. 


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