MARKET CLOSE: NZ shares fall on China, Greece fears; Kathmandu, Warehouse, Restaurant Brands drop

Thursday 9th July 2015

New Zealand shares fell as global uncertainty over China's financial markets and Greece's debt crisis spooked investors. Kathmandu Holdings, Warehouse Group and Restaurant Brands declined in a broad-based selloff.

The S&P/NZX 50 Index fell 30.25 points, or 0.5 percent, to 5737.45, recovering from a 1.4 percent intraday drop. Within the index, 35 stocks fell, nine rose and six were unchanged. Turnover was $206 million.

The benchmark index climbed out of its morning slump after Asian markets opened better than expected. International markets have been spooked by a sharp correction on China's stock exchange, with the Shanghai SE Composite Index slumping a third over the past month, triggering selloffs across the region as traders fret over signs of weakness in the world's second largest economy. The turnaround in Chinese equity markets ended a more than 150 surge in the past 12 months.

"This morning volumes were very light and it actually felt as though there was a little panic selling from retail investors in the market - it was get-me-out-type selling as opposed to anything else," Matthew Goodson, managing director of Salt Funds Management said. "All markets rebounded early-mid afternoon when Asian markets opened a little better. The Shanghai market is still up 70 to 80 percent over the last 12 months."

Kathmandu, the outdoor goods retailer facing a takeover by Brisoe Group, led the benchmark index lower, down 4.3 percent to $1.56. Warehouse, the discount retailer, fell 2.6 percent to $2.65. Restaurant Brands, the country's largest fast-food operator, declined 2.6 percent to $4.15. SkyCity Entertainment Group, the casino operator, dropped 1.9 percent to $4.20. Briscoe, which is outside the benchmark, fell 0.4 percent to $2.74.

On top of concerns about China's slowing economy, Goodson said investors were still worried about the unfolding Greece debt crisis.

"The other thing is Greece - will Germany remember that it got bailed out by the Marshall Plan after World War Two?" Goodson said. "Because there is not a hope in Hades that Greece can pay their debt back, there is no mechanism to kick a country out of the EU, but they can be removed from the euro (currency). If you remove one country from the euro that's a very dangerous thing as that will lead to questions of who is next?"

Fletcher Building, the construction and building supplies firm, rose 0.8 percent to $7.94, recovering from an intraday drop to a two-and-a-half-year low of $7.72. Spark New Zealand, formerly Telecom Corp, fell 0.2 percent to $2.785.

Nuplex Industries, the specialty chemicals maker, dropped 1.5 percent to $4.06. Orion Health Group, the health management software developer, declined 1.7 percent to $3.98.

Pacific Edge, the biotech firm, was the best performer on the benchmark index up 3.1 percent to 66 cents.

Outside the benchmark index, Mercer Group was unchanged at 10 cents after saying annual earnings fell as much as 40 percent due to missing sales targets for its Titan 500 Slicers.

BusinessDesk.co.nz

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