MARKET CLOSE: NZ shares extend slide; A2 Milk, Sky TV, Fletcher decline

Wednesday 6th January 2016

New Zealand shares extended their slide from the record high reached on Dec. 31, with concerns about faltering growth in China weighing on sentiment. A2 Milk Co, Sky Network Television and Fletcher Building declined.

The S&P/NZX 50 Index slipped 15.56 points, or 0.3 percent, to 6262.52. Within the index, 23 stocks fell, 19 rose and 8 were unchanged. Turnover was $92.8 million.

The NZX 50 extended yesterday's 1.1 percent decline, when it joined a global rout in equity markets after figures showed a deeper contraction in Chinese manufacturing.

A2 Milk led the index lower, falling 4.2 percent to $1.84. The company's share value skyrocketed over 230 percent last year, with strong Chinese demand for its infant formula driving momentum. Fears about a slowdown in the Chinese economy are having a negative impact on A2's share price, said Grant Davies, investment adviser at Hamilton Hindin Greene.

"A2 has fairly heavy exposure to China with their dairy at the moment, and they're leading the market down," Davies said. "People are probably quite happy to take a bit of profit too, there will be plenty out there sitting on decent gains, and why not take a bit of profit on A2, particularly when the market's down, you can take a little out of A2 and look for other bargains on the market."

Sky TV fell 3.6 percent to $4.34. New Zealand's dominant pay TV provider announced in October that it expects profit will fall as much as 11 percent in 2016, with largely flat revenue and increased capital expenditure. The company is battling to retain customers against the rise of on-demand streaming services, such as US content provider Netflix. The shares fell 23 percent last year, from $5.99 on Jan. 5.

"It's the same old story with Sky TV, the changing marketplace is obviously impacting investor confidence," Davies said.

Dual listed Fletcher Building fell 2.2 percent to $7.21, Westpac Banking Corp declined 1.5 percent to $34.52, and Australia & New Zealand Banking Group dipped 1.3 percent to $28.60, echoing declines on the ASX.

Fonterra Shareholders' Fund dipped 0.2 percent to $6.11, after dairy product prices unexpectedly slipped in the latest GlobalDairyTrade auction. The market was weaker than expected, Davies said, and that stock and the New Zealand dollar had declined accordingly.

Spark New Zealand rose 1.7 percent to $3.305. Morningstar upgraded the stock to 'hold' from 'reduce'. New Zealand Refining rose 1.7 percent to $3.70.

Property stocks rose, with Argosy Property up 1.3 percent to $1.18, Property for Industry up 1.3 percent to $1.61, and Kiwi Property Group rising 1.1 percent to $1.37.

Warehouse Group, which owns the Noel Leeming chain, rose 1.1 percent to $2.68. Noel Leeming's competitor Dick Smith Holdings, which is listed on the ASX, yesterday announced it had been put into receivership. The receivers hope to sell the consumer electronics chain with 393 stores in Australia and New Zealand as a going concern.

BusinessDesk.co.nz

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