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MARKET CLOSE: NZ shares fall in muted trading; Gentrack drops on Brexit jitters

Tuesday 19th March 2019

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New Zealand shares fell from a record in quiet trading. Gentrack led the declines as investors fretted over the Brexit implications for the UK exposed utilities software developer. 

The S&P/NZX 50 Index decreased 17.85 points, or 0.2 percent, to 9,497.27. Within the index, 23 stocks fell, 18 gained and nine were unchanged. Turnover was $104.9 million. 

Gentrack fell 4.2 percent to $4.60 on a volume of 22,000 shares, less than a third of its usual volume. The stock is down 8.7 percent so far this year, with investors unnerved by what impact Brexit will have on the firm, which derives about 40 percent of its sales in the UK. UK Prime Minister Theresa May is expected to seek a longer extension from Britain's exit from European Union, adding uncertainty for investors.  

"It's mainly about Brexit for that stock - no-one's 100 percent sure what's going to happen there," said Peter McIntyre, an investment adviser at Craigs Investment Partners. 

Fletcher Building fell 1.9 percent to $4.74 on a volume of 1.5 million, compared to its 90-day average of 1.8 million. 

McIntyre said news that private civil construction firm Fulton Hogan's first-half earnings fell on challenging Australian projects and softness in New Zealand added to the growing nervousness among investors about the building sector. 

Metro Performance Glass, which is outside the benchmark index, fell 2.1 percent to 47 cents after downgrading its earnings guidance citing a weak Australian market. 

"Anything with construction attached to it, investors have been looking to exit it or lighten their weightings," McIntyre said. "There's still nervousness in that sector among investors in New Zealand and Australia." 

Vector posted the biggest gain on the benchmark index, up 2.3 percent at $3.54 on lighter volume than usual of 101,000. 

McIntyre said infrastructure stocks paying reliable dividends remained attractive for investors, especially with interest rates remaining low. 

Auckland International Airport slipped from a record close, down 0.2 percent at $7.975 on a volume of 678,000. Chorus fell 0.7 percent to $5.77, having closed at a record last Friday before shedding rights to its dividend yesterday. 

New Zealand Refining rose 2.1 percent to $1.97 after reporting a recent recovery in regional margins which had been negative for much of January and February. The 239,000 volume was above the stock's 199,000 three-monthly average. 

Mainfreight gained 1.1 percent to a record $34.50, on a volume of 82,000, more than twice its three-monthly average. 

Spark New Zealand was the most traded stock at 3.1 million shares, below its 5.6 million 90-day average. The shares declined 0.6 percent to $3.625 today. The telecommunications company is issuing 1 billion Norwegian krone, or $169 million, in 10-year notes to partially refinance an upcoming maturity.

Contact Energy increased 0.5 percent to $6.50 on a volume of 1.8 million shares and Sky Network Television fell 0.7 percent to $1.42 on a volume of 1.4 million. 

Of other companies trading on volumes of more than a million shares, Trade Me Group was unchanged at $6.40, Z Energy was unchanged at $6.28 and Meridian Energy increased 1 percent to $3.93. 

Fonterra Shareholders' Fund units rose 0.7 percent to $4.38 and Synlait Milk was up 0.8 percent at $11.29 ahead of their respective first-half results tomorrow. Analysts are expecting small single-digit earnings growth for Synlait, and will be more focused on Fonterra's balance sheet. A2 Milk fell 0.9 percent to $13.70. 

Outside the NZX50, Warehouse Group rose 1.9 percent to $2.12 after reporting a 5.7 percent increase in underlying first-half earnings. 

McIntyre said the retailer's Noel Leeming brand performed well in the period, however, the lower dividend payment of 9 cents per share was a disappointment. 

While Warehouse noted a weaker Christmas and New Year trading period, it said changing consumer behaviour had seen increased Black Friday sales in November. 

Of other retailers, Briscoe Group was unchanged at $3.35, Hallenstein Glasson rose 1.2 percent to $4.36, Kathmandu Holdings increased 0.8 percent to $2.48. 


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