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MARKET CLOSE: NZ shares fall as investors take a breather

Thursday 10th January 2019

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New Zealand shares fell as investors took a breather after a round of US-China trade talks wound up. Ryman Healthcare gave back some recent games and Summerset dipped. 

The S&P/NZX 50 index fell 28.06 points, or 0.3 percent, to 8,919.16. Within the index, 23 stocks fell, 24 gained and three were unchanged. Turnover was $123 million. 

Delegates from China and the US wrapped up three days of trade talks Wednesday and markets had been cheered by the first face-to-face negotiations since both sides agreed to a 90-day truce. China’s Commerce Ministry said the talks were extensive, and helped establish a foundation for the resolution of each others’ concerns, according to Reuters. However, there were few concrete details. 

Equity markets were also cheered when minutes from the US Federal Reserves' December meeting underscored the central bank is willing to be patient about any future monetary tightening. 

"We have had four days of stronger equity markets globally as investors anticipated the potential for a US-China deal," said Shane Solly, a portfolio manager at Harbour Asset Management. The "softer tone" from Federal Reserve officials had added to the upbeat mood, he said.

However, "we are having a bit of a pause today" and some stocks that gained - yesterday in particular - had seen some profit-taking, he said. 

Ryman Healthcare was down 3.3 percent to $10.98 on slightly higher than normal volumes with 1 million shares changing hands. Fellow retirement village operator and developer Summerset shed 1.9 percent to $6.18 on very light volume. Earlier it said it sold 193 occupation rights in the three months to Dec. 31, versus 204 in the prior year, but that it has met its 2018 target to build 450 new units. 

SkyCity shed 1.4 percent to $3.53 while Fletcher Building was down 0.2 percent to $4.97. 

Kathmandu, which has been hard hit after reporting a weaker-than-expected Christmas trading period, shed 1.3 percent to $2.26. Volumes, however, were very thin with only about 69,000 shares trading hands. 

Stocks like Heartland Group, up 2.2 percent to $1.42, and Gentrack, up 2.8 percent to $5.09, and Skellerup, which added 1 percent to $2.04, fared better. Solly noted they tend to be more favored by local investors.

The heaviest trading was in Spark, which again accounted for almost a quarter of total trading volume. It ended up 0.2 percent at $4.16. According to Solly, it is well held by international investors and Australian institutions so it "does tend to get more activity."  Chorus shed 1.9 percent to $4.73. 

Trade Me was also heavily traded, with 3.2 million shares changing hands versus its average daily volume of 855,741 over the past three months. Trade Me was unchanged at $6.33. 

Solly said investors will now be shifting their attention to the upcoming reporting season. He noted that today's "Truckometer" data from ANZ Bank, which tracks heavy and light traffic as a gross domestic product indicator, is pointing to softness in the economy. 

It was "pretty weak," Solly said.

"We had been anticipating the New Zealand economy would come off the boil and it is.

"We will be looking pretty carefully at companies that are New Zealand focused. There could be a little bit of risk around some of their earnings," he said. 

(BusinessDesk)

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