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MARKET CLOSE: NZ shares edge lower as global ructions weigh; Tourism Holdings sinks

Monday 21st October 2019

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New Zealand shares edged lower as global investors were unnerved by the uncertainty over the Brexit outcome and a slowing pace of growth in China. Tourism Holdings dropped to a two-month low. 

The S&P/NZX 50 Index decreased 4.37 points, or 0.04 percent, to 11,062.75. Within the index, 25 stocks fell, 19 rose, and six were unchanged. Turnover was $101 million. 

Stocks across Asia were mixed, with Australia's S&P/ASX 200 Index down 0.1 percent in afternoon trading, Singapore's Straits Times Index was up 1 percent and China's Shanghai Composite Index was flat.

Investors have one eye on Wall Street for a steer on the global economy as US-listed companies report September-quarter earnings. The other is on the geopolitical uncertainty stemming from Britain's planned exit from the European Union and the ongoing trade war between China and the US. 

Peter McIntyre, an investment advisor at Craigs Investment Partners, said investors are on high alert for what's happening overseas, ranging from the US earnings season, Brexit, the Hong Kong protests, and slowing Chinese economic growth. 

"It's just another worrying factor for investors out there with reporting season in the US. Investors are just ultimately a wee bit cautious at this juncture," he said. 

Tourism Holdings led the local market lower, down 10.6 percent at $3.70 on a volume of 239,000 shares, more than its 90-day average of 129,000. The rental RV operator pre-empted this Wednesday's annual meeting when it said margins shrank 40 percent from its US vehicle sales, and if that dynamic continued it would report a weaker annual profit. 

"They stopped short of issuing formal guidance for FY20 but if the current market persists it will be below the normalised earnings of $27.9 million from the prior year," McIntyre said. "It will be a good talking point at the AGM. At least they've given everyone the change to work out their questions." 

A number of blue-chip stocks were among those to decline, with Port of Tauranga down 3 percent at $6.50 ahead of its annual meeting on Friday. Genesis Energy fell 1.5 percent to $3.30, Air New Zealand declined 1.4 percent to $2.84, Z Energy decreased 1.1 percent to $5.47 and A2 Milk Co was down 1 percent at $12.94. 

Fletcher Building was the most traded stock on a volume of 3.7 million shares, more than its 1.5 million average. It fell 2.1 percent to $4.72. 

Vector dipped 0.3 percent to $3.59 after it reported a 1.5 percent increase in September-quarter electricity customer numbers from a year earlier and a 2.3 percent lift in gas customers. 

Meridian Energy posted the day's biggest gain, up 2.4 percent at $5.405 on a volume of 787,000, less than its 1.4 million average. Spark New Zealand rose 2 percent to $4.58 on a volume of 2.5 million, and Sanford was up 1.4 percent at $7.25. 

Of other stocks that traded on volumes of more than a million, Contact Energy decreased 0.4 percent to $8.42 and Precinct Properties New Zealand was unchanged at $1.88. 

Kathmandu Holdings rose 1 percent to $3.17. Shareholders last week approved a $368 million acquisition of surf brand Rip Curl. 

Outside the benchmark index, PGG Wrightson increased 0.8 percent to $2.48 ahead of tomorrow's annual meeting. 

Tilt Renewables was unchanged at $2.98 after its September quarter production was 4 percent lower than a year earlier but 2 percent better than the long-term average. A 7 percent increase in New Zealand generation was not enough to offset a 9 percent decline in Australia. 


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