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MARKET CLOSE: NZ shares fall as Meridian faces declining hydro storage

Tuesday 16th October 2018

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New Zealand shares fell for a second day with Meridian Energy lower as the power company confronts dry conditions, and exporters Comvita and Fisher & Paykel Healthcare faced a stronger kiwi dollar. 

The S&P/NZX index declined 34.62 points, or 0.4 percent, to 8,803.45. Within the index 26 stocks fell, 19 gained, and five were unchanged. Turnover was $174.2 million, with Ryman Healthcare accounting for $99.2 million of that. Ryman fell 0.8 percent to $12.70. 

Meridian fell 1.7 percent to $3.13 on slightly bigger volumes than normal after its monthly operating update showed South Island storage 25 percent below average and North Island storage at 90 percent. National hydro storage is below historical norms, coinciding with an outage at the Pohokura gas field which has pushed up wholesale prices. 

"The dry conditions are having an impact, particularly in the South Island," said Greg Smith, head of research at Fat Prophets. 

Genesis Energy, which has ramped up production from its dual-fuel Rankine units at Huntly to fill the gap, rose 1 percent to $2.445. 

Summerset Group led the market lower, down 3 percent to $6.89 on almost half the usual volume. The stock has gained 24 percent this year, the NZX 50's best performer, having given up 11 percent during the past three months. 

Smith said higher-than-expected inflation data today ruled out the chance of an interest rate cut by the Reserve Bank. However, he expects the RBNZ will keep the official cash rate at a record low for some time, supporting rate-sensitive stocks. 

Vital Healthcare Property Trust gained 0.7 percent to $2.065 on light volumes and Precinct Properties New Zealand increased 0.7 percent to $1.42. 

The higher inflation figure boosted the kiwi dollar, which was trading at 65.68 US cents and 92.13 Australian cents at 5pm in Wellington. That reduces the revenue exporters earn. 

F&P Healthcare fell 1.7 percent to $14.03 on lighter volumes than usual, while Comvita was down 1.5 percent to $5.91 on just 5,100 shares changing hands. Kathmandu, which counts Australia as its biggest market, dropped 1.4 percent to $2.88. 

Sky Network Television posted the biggest gain on the day, up 3.8 percent to $2.20, with 1.4 million shares traded. The New Zealand Herald reported the pay-TV operator may be a potential takeover target by NBC Universal. The company holds its annual meeting on Thursday. The stock has gained 6.3 percent this week and Smith said it may have bottomed out, having slumped 22 percent so far this year. 

Fonterra Shareholders' Fund units rose 2 percent to $4.65 ahead of tonight's Global Dairy Auction, where prices are expected to decline. 

Pushpay Holdings rose 1.4 percent after Fisher Funds-managed Kingfish said it's taken a stake in the payment app developer. 

Ebos Group increased 0.2 percent to $21.30 on heavier trading than usual. The company told shareholders it expects modest earnings growth this year after a solid first quarter. 

Among other active stocks, Spark New Zealand slipped 0.1 percent to $3.89 on a volume of 1.8 million shares. 


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