Monday 27th March 2017
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New Zealand shares fell amid concern the failure of US President Donald Trump to push through his policy reforms means US growth won't be as robust as some investors had hoped, denting global sentiment. Summerset Group, Trade Me and Metro Performance Glass led the decline.
The S&P/NZX 50 Index declined 11.11 points, or 0.2 percent, to 7,062.72. Within the index, 23 stocks fell, 22 rose, and five were unchanged. Turnover was $147 million.
With little local news, the New Zealand bourse took its lead from Wall Street, where the Dow Jones Industrial Average and the Standard & Poor's 500 ended lower last week following Trump's failure to push through reforms of Obamacare, even with a US parliament stacked with Republicans. Trump has said he will now focus on another campaign pledge - cutting taxes.
"If he was to get through with those corporate tax changes that would be huge boost for US companies and the US economy, which would send a lot of inflation out globally," said Peter McIntyre, an investment adviser at Craigs Investment Partners. "But it seems more of a slow process, particularly with the Obamacare repeal that's fallen through."
Summerset, the retirement village operator, fell 2.9 percent to $4.98, leading the index lower. Trade Me, the auction website, fell 1.5 percent to $5.10 while MetroGlass fell 2.1 percent to $1.42 and is the worst performer on the benchmark index this year, ahead of Fletcher Building.
McIntyre said both companies are exposed to an intensely competitive building sector, with more businesses chasing work put out to tender. "It's all very well winning a tender but it has to be profitable." Building firms were also struggling to find enough workers given the high demand, he said.
MetroGlass has declined 26 percent this year. Fletcher fell 0.5 percent to $7.92 today and has fallen 25 percent so far this year.
Goodman Property Trust rose 1.7 percent to $1.22 after the industrial and commercial property investors said an independent valuation had added $115 million to the value of its property portfolio, which now stands at more than $2.4 billion and will be reflected, subject to audit, in the group's full-year results.
A2 Milk was the biggest gainer on the NZX 50, rising 4.2 percent to $2.95.
McIntyre said both A2 and honey products maker Comvita have benefitted from China's decision to delay changes to its rules for e-commerce, where quantities of both companies' products trade on the so-called grey market. Comvita rose 1.2 percent to $8.50.
TeamTalk rose 8 percent to 93 cents. The telecommunications minnow has been in a war of words with suitor Spark New Zealand after independent adviser Grant Samuel & Associates found the underlying value of TeamTalk is between $1.52 to $2.11 per share - well above Spark's 80 cent offer. Further muddying the takeover, TeamTalk announced on Friday that it had agreed to sell a 70 percent stake in its Farmside rural internet services provider to Vodafone New Zealand for $10 million, almost half what Spark is willing to pay for the entire group.
McIntyre said while investors don't believe the Grant Samuel valuation, they are expecting Spark to sweeten its offer, hence the share price gain.
Spark rose 0.4 percent to $3.405.
Fonterra Shareholders' Fund fell 1.5 percent to $6.06 and Metlifecare fell 1.3 percent to $5.95.
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