MARKET CLOSE: NZ shares fall with Asia; MRP, Spark, Steel & Tube drop

Wednesday 20th January 2016

New Zealand shares fell, joining a regionwide sell-off as international sentiment continues to drive the local market. Mighty River Power, Spark New Zealand and Steel & Tube Holdings all dropped.

The S&P/NZX 50 slipped 10.5 points, or 0.2 percent to 6113.72. Within the index 20 stocks fell, 25 rose, and five were unchanged. Turnover was $138 million.

"There's no real news driving our market other than what's happening offshore," said Peter McIntyre, investment adviser at Craigs Investment Partners. "Today's inflation was very benign and economists were calling for a rate cut - that should be positive for our market on an equity basis, but there just doesn't seem to be any direction either way."

Mighty River Power led the market down, dropping 5.7 percent to $2.63, a three-month low. Quarterly data released today show the power company didn't benefit from a 0.9 percent increase in national electricity demand in the last three months of 2015, losing 1,000 customers from the September quarter and with electricity sales prices falling 1.5 percent and sales volumes down 7 percent compared to the December 2014 quarter.

"It's quite a significant fall for a utility-based stock which provides pretty good income," McIntyre said.

Stocks fell across Asia in afternoon trading with Japan's Nikkei 225 down 2.9 percent, Hong Kong's Hang Seng falling 3.8 percent and the Chinese CSI 300 composite dropping 1.6 percent.

With Australia's S&P/ASX 200 down 1.3 percent at 5:30pm NZ time, dual-listed banks suffered. Australia & New Zealand Banking Group fell 2.3 percent to $25.60, and Westpac Banking Corp dropped 1.6 percent to $32.47.

Spark fell 1.9 percent to $3.31, and Steel & Tube shed 1.8 percent to $2.22. Heartland dropped 1.6 percent to $1.26, and Skellerup Holdings declined 1.4 percent to $1.44.

Leading today's rising stocks was Kathmandu Holdings, up 2.6 percent to $1.56. Diligent Corp rose 2.2 percent to $6.02, SkyCity Entertainment Group climbed 2 percent to $4.54, and Xero gained 1.7 percent to $16.59.

Fonterra Shareholders Fund advanced 1.9 percent to $5.95. Dairy product prices fell 1.4 percent in the latest GlobalDairyTrade auction, declining for the second time this year, amid expectations that worldwide supply will outstrip demand.

"That's on the back of wide discussions about whether they will reduce the payout," McIntyre said. "This is a margin business, so when prices are declining for their main commodity input, the market's obviously expecting higher margins and greater profitability from the food side of their business."

A2 Milk rose 1.7 percent to $1.77.

"Its trading range has been quite wide of late, but whenever there's any weakness in the stock you've seen buyers come back into it," McIntyre said.

New Zealand Refining Co rose 1.6 percent, and Z Energy, one of the refinery's cornerstone shareholders, rose 0.9 percent to $6.48.

"New Zealand Refining has been a strong performer for the whole year," McIntyre said. "Lower oil prices and a lower dollar is really good for New Zealand Refining, and the market's expecting some time this quarter for them to make an announcement regarding their dividend policy."

Air New Zealand rose 1 percent to $3.07. Singapore Airlines today announced its 'Capital Express' route, which will make the first direct flight from Wellington to Canberra and then on to Singapore four days per week on a Boeing 777, but will not involve codesharing with Air New Zealand.

BusinessDesk.co.nz

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