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MARKET CLOSE: NZ shares decline as investors fret over looming Brexit vote

Friday 17th June 2016

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New Zealand shares slid as investors remain concerned the UK may vote to leave the European Union next week, potentially prompting other countries to leave the alliance and causing market turmoil.

The S&P/NZX 50 Index shed 41.51 points, or 0.6 percent, to 6,847.06. Within the index, 30 stocks fell, 16 rose and four were unchanged. Turnover was $281.6 million.

The country's benchmark index is heading for a second weekly decline, falling from record high levels, as investors favour safe haven assets such as bonds and gold due to fears that British voters may opt to leave the EU in the June 23 referendum as polls show sentiment moving towards the 'leave' camp. Still, the killing of British MP Jo Cox on Thursday was seen by some as lessening the chances of the so-called Brexit.

"Markets are not quite sure whether to go up or down at the moment as investors try to weigh the odds of Brexit occurring," said Matthew Goodson, managing director of Salt Funds Management. "Between now and Brexit vote day, I think we are going to trade in a little bit of an aimless and slightly fearful pattern."

Goodson said in the short term, Brexit could cause a significant disruption to financial markets, partly due to the event itself and partly because investors are fearful poor performing economies such as Italy and Spain may also choose to exit the EU.

Property stocks, which are normally favoured for their yield appeal, fell as investors sell down some of their holdings to fund new investment in Stride Property's spin off and equity raise. Stride announced today that it would bring forward its bookbuild with selected institutions and NZX firms for its Investore Property unit to June 21.

Property For Industry dropped 4.7 percent to $1.52, Argosy Property dropped 2.6 percent to $1.12, Precinct Properties slid 1.2 percent to $1.235, and Stride slid 0.9 percent to $2.28. Goodman Property Trust gained 0.8 percent to $1.285.

Auckland International Airport gained 0.6 percent to $6.50 as investors were relieved it didn't face stronger action from the Commerce Commission in the regulator's draft decision yesterday on its review of rules for regulated electricity, gas and airport services.

Trilogy International closed unchanged at $4 after resuming trading today, having been halted for a share sale at $3.70 apiece, a 7.5 percent discount. The skincare and home fragrance company said its share placement and the selldown by major shareholder The Business Bakery was "significantly oversubscribed" and it didn't need support from the underwriter.

At the close of trading today, Tegel Group Holdings, the poultry group taken public by private equity firm Affinity Equity Partners, will enter the benchmark index, replacing Coats Group, the UK-based threadmaker that grew out of diversified investor Guinness Peat Group and is quitting its local listing, ending the exchange's association with investor Ron Brierley's former empire. Tegal gained 0.6 percent to $1.68 while Coats slid 8.4 percent to 49 cents.

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