MARKET CLOSE: NZ shares drop as Brexit fears ease; Tegel, Auckland Airport, Xero fall

Wednesday 22nd June 2016

New Zealand shares dropped as fears the UK will exit the EU continued to dissipate, prompting some offshore investors to exit what they'd seen as a relatively safe haven market. Auckland International Airport, Xero and Tegel Group declined.

The S&P/NZX 50 Index fell 57.67 points, or 0.8 percent, to 6,781.73. Within the index, 33 stocks fell, 11 were unchanged and six rose. Turnover was $160.4 million.

"What we've seen is a continuation of yesterday - with market views to Brexit changing towards a view there might be no Brexit, it feels like we're starting to see a bit of offshore selling of the kiwi market from funds that may have flooded here in safe-haven type buying," said Matt Goodson, managing director at Salt Funds Management. "The weakness in the market over the last couple of days feels like it might have been driven by that kind of flow, and some of the large-cap stocks have weakened in the last several days on that offshore selling."

Auckland International Airport led the index lower, down 2.8 percent to $6.27. New Zealand Refining Co dropped 2.7 percent to $2.55 and Xero declined 2.4 percent to $18.35.

Goodson said the weakness might also be due to investors fundraising to buy into Stride Property's $185 million initial public offering for Investore, the subsidiary it is spinning out, and Vital Healthcare Property Trust's $160 million rights offer.

"There's just a bit of fundraising in the property market which, after a very strong run over recent months, has been just a bit weaker over the last month."

Stride Property was the best performer on the index today, up 2 percent to $2.33. The company said today that its IPO has been priced at $1.49 a share after the bookbuild was completed, with $170 million allocated to institutional investors and brokers, and $15 million set aside for eligible Stride shareholders. Vital Healthcare was unchanged at $2.13.

Tegel Group fell 1.8 percent to $1.64. Yesterday, the poultry group which listed in April reported annual sales and profit higher than its prospectus forecasts and said it was on track to achieve its targets for the current year.

"The disclosure they gave in their result was a little bit different to the way they'd framed it in their prospectus, so people are trying to get their heads around that," Goodson said. "There had been some hope they might beat quite strongly their prospectus expectations and that didn't occur. They slightly beat prospectus but the mix of how they did so was just a little different to how the market had expected and it wasn't the strong beat some had hoped for."

Steel & Tube Holdings declined 1.6 percent to $1.87 and Meridian Energy dropped 1.6 percent to $2.52.

Spark New Zealand rose 0.3 percent to $3.39. The Auckland-based company's mobile revenue will rise at least 7.9 percent in the 2016 financial year to over $1.1 billion, which it says will make it the biggest player in the market, ahead of Vodafone New Zealand.

Outside the main index, Pushpay Holdings rose 1.4 percent to $2.18. The company wants shareholder approval to more than double remuneration for non-executive board members and potentially appoint two US-based directors as it focuses on growth there.

BusinessDesk.co.nz

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