MARKET CLOSE: NZ shares tread water, Air NZ falls as Qantas signals weak demand

Monday 18th April 2016

New Zealand shares rose to a fresh high in light trading as the local index outperformed Asian markets. SkyCity Entertainment Group gained while Air New Zealand dropped, following ASX-listed Qantas Airways lower.

The S&P/NZX 50 Index gained 6.46 points, or 0.1 percent, to 6,851.2. Within the index, 21 stocks rose, 18 fell and 10 were unchanged. Turnover was $113 million.

Other markets across Asia traded lower this afternoon, as oil futures plunged after producers' talks in Doha failed to reach any agreement to slow the production that has led to a glut of oil, as well as weakness following a lethal earthquake in Japan. At 5.15pm New Zealand time, Japan's Nikkei 225 was down 3 percent, Hong Kong's Hang Seng had lost 1.2 percent and Australia's S&P/ASX 200 had declined 0.4 percent.

"The volumes are very, very light, especially if you take out the pre-market trades," said David Price, a broker at Forsyth Barr. "The market's basically flat, which is not a bad performance given most of the other markets in our region are reacting to the oil price which we've seen come off quite sharply in the futures. It's very school-holiday-ish volumes."

SkyCity Entertainment Group led the index, rising 2 percent to $5.23.

It shed 7 percent over April 7th and 8th to $4.60 after the surprise resignation of its chief executive Nigel Morrison, but regained ground last week after it ran a conference call with investors and analysts, which media were barred from. It's now trading higher above $4.95, where it sat before Morrison's resignation announcement.

"People were jumping at shadows a little bit, which is a little bit surprising given if there were any performance issues with the business they would have had to make a continuous disclosure announcement and that hasn't been the case," Price said. "It fell down to that $4.60 and has bounced quite strongly."

Steel & Tube Holdings increased 1.8 percent to $2.32. It dropped as low as $2.22 after the Commerce Commission said its seismic steel mesh didn't meet standards and it understands the mesh will not be sold until compliance can be demonstrated, but rose on Friday as investors bargain hunted.

Heartland Bank gained 1.7 percent to $1.21, and Precinct Properties New Zealand advanced 1.6 percent to $1.31.

The worst performer was Air New Zealand, which lost 4.7 percent to $2.86. ASX-listed Qantas fell the furthest it has in two years after it reduced its previously planned domestic capacity expansion. Qantas shares dropped as much as 14 percent and were trading 11.1 percent lower at A$3.69 at 5.20pm in New Zealand.

"Qantas have just looked at the demand side of the equation and things have fallen off quite a lot," Price said. "They'd planned quite a lot of capacity addition and that will be a flow-through where Air New Zealand will see the softening of demand in the Australian market. The international market's going to be weak for Qantas, they referred to the US. Obviously Air New Zealand's exposed to that."

NZX fell 1.9 percent to $1.01 while Kathmandu Holdings declined 1.7 percent to $1.76.

New Zealand Refining was unchanged at $3.18 and has dropped 15.2 percent this year. The company wants shareholders to approve a change to its constitution that would allow it to cut its minimum number of directors to three from eight, and remove a maximum cap of 12 directors. The oil refinery operator expects the board would be made up of three representatives from its oil company shareholders - ExxonMobil, BP New Zealand and Z Energy - and four independents, one of whom would be chair.

Outside the main index, Augusta Capital advanced 0.9 percent to $1.10. The listed property investor and fund manager has bought NZME House in Auckland for $115.8 million with plans to bundle the property into a syndication investment offer.

On the ASX, APN News & Media rose 4.7 percent to 60.75 Australian cents. It could spin off its NZME New Zealand media assets after abandoning an initial public offering for the division in February.

BusinessDesk.co.nz

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