MARKET CLOSE: NZ shares drop, led by TradeMe, Air NZ while Fletcher gains

Friday 9th September 2016

New Zealand shares fell for a second day, correcting a market some traders say has become overvalued, with Trade Me Group and Air New Zealand among the biggest decliners.

The S&P/NZX 50 Index dropped 66.14 points, or 0.9 percent, to 7,468.59. Within the index, 29 stocks fell, 11 rose and ten were unchanged. Turnover was $122 million.

The benchmark index has gained 19.1 percent this year and hit a record high of 7,571.1 on Wednesday as investors chase yield in a world of low interest rates.

"We've seen a continuation of profit taking in a number of our stocks, a healthy market does undertake these corrections from time to time," Grant Williamson, director at Hamilton Hindin Greene said.

Trade Me was the worst performer, down 6.7 percent to $5.45, while Air New Zealand dropped 5.3 percent to $2.045.

New Zealand Refining fell 4.3 percent to $2.22, Auckland International Airport was down 3.5 percent to $7.355, and Ebos Group declined 2.7 percent to $18.35.

Some of the moves are large, but need to be seen in the context of the gains seen so far this year, Williamson said. Despite today's selling, Trade Me is still up 34.5 percent this year and Auckland International Airport has gained 32.5 percent.

The best performer was Steel & Tube Holdings, up 1.3 percent to $2.31. It has gained 4 percent since Monday when it was announced it would drop out of the S&P/NZX50 benchmark index on Sept. 16.

Fletcher Building gained 0.7 percent to $11.10, and is up nearly 50 percent this year. Strong construction demand has stoked interest in the building and construction company, which last month reported a 71 percent gain in full-year profit to $462 million and met its earnings guidance.

"It's the market's darling, it continues to perform extremely well," Williamson said. "It's very impressive given it's one of our largest stocks. The market's starting to believe the new CEO is making a material difference."

Trustpower rose 0.1 percent to $7.95. The shareholders have overwhelmingly voted to carve out its windfarms and renewable development pipeline, splitting the company into two separate businesses that will be listed on the NZX and ASX.

Under the proposal Trustpower keeps the trans-Tasman generation assets, while Tilt Renewables gets the wind projects that are either in development or planning stages and are situated mainly in Australia. A court-approved scheme of arrangement would see shareholders receive one share in each of the companies for every existing share they currently own.

Outside the main index, Veritas dropped 6.9 percent to 27 cents. The listed hospitality company, which owns the Mad Butcher franchise and Nosh Food Markets, has agreed a deal with its bank to reduce debt repayments and reschedule its debt. Veritas is carrying debt of $33 million and a sharp fall in its share price since Aug. 29 means its market value is now just $12.5 million. The share's value has fallen 39.5 percent this year.

Wellington Merchants, formerly known as Kirkcaldie & Stains, was unchanged at $3.44. The directors have recommended its shareholders accept Ron Brierley's latest takeover offer, with the two largest shareholders indicating they will do so. Brierley's Mercantile NZ has offered $3.45 per share, an uplift from his previous offers of $2.75 and $3 made in March and June respectively.

BusinessDesk.co.nz

Comments from our readers

No comments yet