MARKET CLOSE: NZ shares fall on Air NZ profit-taking, selldown of property companies

New Zealand shares fell, snapping a seven-day rally, as Air New Zealand was sold after recent gains and investors sold property companies such as Property for Industry, Goodman Property Trust and Kiwi Property Group on the view that rising interest rates makes their dividend yield less appealing.

The S&P/NZX 50 Index fell 16.65 points, or 0.2 percent, to 7405.84. Within the index, 28 stocks fell, 16 gained and six were unchanged. Turnover was a larger-than-average $261 million.

Air New Zealand fell 3.5 percent to $2.60, having climbed almost 6 percent in the past two days after the national airline said it had tapped former Prime Minister John Key to join its board starting in September.

"We've seen some profit-taking in Air New Zealand. Investors love the idea that the ex-PM is joining the board," said Grant Williamson, a director at Hamilton Hindin Greene. "But one board member won't make a huge difference in the short term."

Property for Industry fell 2.5 percent to $1.595, leading a clutch of property stocks lower. Goodman Property fell 2 percent to $1.20 and Kiwi Property Group declined 1.4 percent to $1.40. Vital Healthcare Property Trust shed 1.4 percent to $2.20, Precinct Properties New Zealand declined 1.2 percent to $1.205 and Argosy Property fell about 1 percent to $1. Investore Property was down 0.8 percent to $1.31 and Stride Property fell 0.6 percent to $1.73.

"We've seen selling in the property stocks today as we did three or four weeks ago," Williamson said. "There's some large holders looking to make changes - some investors looking at the fundamentals: interest rates tracking up and what that means for yield stocks. Not quite so much demand."

While further selling was possible, there was "still a very good differential between interest rates and dividend yields," he said.

Among other stocks sensitive to perceptions in the property market, retirement village operator Ryman Healthcare fell 1.6 percent to $8.65, Summerset Group Holdings dropped 1.4 percent to $5.10 and Metlifecare fell 1.2 percent to $5.69.

Sky Network Television fell 3.7 percent to $3.66. Its proposed merger with Vodafone New Zealand was shot down by the Commerce Commission and today the regulator rejected a similar proposal from media companies NZME and Fairfax Media to merge their New Zealand operations.

NZME tumbled 11 percent to 79 cents while on the ASX, Fairfax was down 1.6 percent at A$1.0625.

Williamson said while media wasn't a sector he followed closely, "certainly the internet has taken a lot of the gloss off that industry."

Australia and New Zealand Banking Group fell 3.5 percent to $33.86, tracking its ASX-listed shares lower after the company reported first-half results yesterday. Fletcher Building was unchanged at $8.48, with about $47 million of stock changing hands.

Among gainers on the index today, a2 Milk extended its rally, rising about 3 percent to $3.46 and its supplier, Synlait Milk, jumped 4.7 percent to $3.98.

"The Chinese have really taken a shine to a2's baby formula. They can't get enough of it," Williamson said, adding that a2 was preparing to announce its dividend policy.

Scales Corp rose 2.1 percent to $3.40 and Z Energy gained 1.7 percent to $7.73. New Zealand Refining rose 0.9 percent to $2.35 after chief executive Sjoerd Post told the annual meeting in Auckland today the company is "cautiously optimistic about refinery margins in Asia Pacific and NZ demand."

Fonterra Shareholders' Fund rose 0.3 percent to $5.92 after prices rose in the latest GlobalDairyTrade auction.

CBL Corp fell 0.3 percent to $3.47 after the Auckland-based credit surety and financial risk insurance firm said it expects to pick up new British customers wanting greater certainty from their insurance providers as the UK exits from the European Union.

Pyne Gould Corp fell 5.9 percent to 32 cents after saying it will consider taking a case involving its Torchlight Fund No 1 LP unit to the Supreme Court after the Court of Appeal ordered it to pay a late payment fee of A$31.5 million to Wilaci. 

G3 Group was unchanged at 64 cents after saying its British souvenir business faces a "significant profit downgrade" that has the NXT-listed mail operations and document manager's board trying to figure out ways to mitigate the decline. 

(BusinessDesk)