MARKET CLOSE: NZ shares fall led by Xero; FSF rebounds from lows

Monday 20th April 2015

New Zealand shares fell, led by Xero, in a broad-based, global sell off, although Fonterra Shareholders' Fund units rebounded from a record low for the second consecutive day.

The NZX 50 Index fell 37.205 points, or 0.6 percent, to 5824.277. Within the index, 25 stocks fell, 15 rose and 10 were unchanged. Turnover was $86 million.

Wall Street declined on Friday, as investors worried that Greece's left-wing government won’t agree to reforms, will default on its debts and be dumped from the Eurozone. Weakness flowed through to the Australian market, with the S&P/ASX 200 Index dropping 0.9 percent in afternoon trading.

The local bourse fell in a broad-based sell off, in the absence of substantial corporate news and as 'risk off' sentiment weighed on the market. Xero, the cloud-based accounting software firm, slid 3.2 percent to $23.12. A2 Milk, the dual-listed milk marketing company, dropped 1.9 percent to 53 cents. Kathmandu Holdings, the outdoor goods retailer, declined 2.2 percent to $1.31. Fisher & Paykel Healthcare, the breathing apparatus manufacturer and exporter, fell 2.2 percent to $6.78. Meridian Energy, the government controlled power generator and retailer, retreated 2.5 percent to $1.925.

"It's certainly a down day today, with offshore markets having a little bit of influence on our market," said Grant Williamson, a director at Hamilton Hindin Greene. "It does seem to be mainly the Greece situation that's on the table, possible default and coming up to some critical dates that will determine what's going to happen with Greece. It's just making investors a little bit cautious, and a little bit nervous."

Units of Fonterra Shareholders' Fund, which give holders access to Fonterra Cooperative Group's dividend stream, rose 1.4 percent to $5.27, recovering further from Thursday's record low close of $5.10. Last week, dairy product prices fell in the latest GlobalDairyTrade auction, hitting the lowest level in the 2015 auctions so far, as prices for milk powder and butter slid amid concern about the outlook for commodities.

"Probably not surprising, at some stage there was always going to be a little bit of bargain hunting in that stock after quite a period of weakness," Williamson said.

Sky Network Television, the country's dominant pay TV provider, was unchanged at $5.97. Spark New Zealand, formerly Telecom Corp, rose 0.4 percent to $2.90. New Zealand broadcasters, including Sky TV and Spark's Lightbox streaming service, have confirmed they've launched legal proceedings against internet service providers who give customers access to "global mode", which allows access to offshore online content, claiming it breaches the local content providers' copyright.

"It'll be interesting to see how that plays out, but obviously Sky in particular is trying to protect its patch," Williamson said.

Outside the benchmark index, Comvita fell 1.3 percent to $3.95. The Te Puke-based maker of health products based on manuka honey affirmed its guidance for a 25 percent rise in full-year earnings, saying it has sufficient supplies of honey to meet growing sales.

"It was reaffirming guidance, and certainly a nice improvement from them," Williamson said. "It wasn't any new information to the market."

BusinessDesk.co.nz

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