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MARKET CLOSE: NZ shares fall; Fonterra fund slips as market mulls dairy scare

10 Mar 2015

New Zealand shares fell, and Fonterra Shareholders' Fund edged lower after the government revealed threats to contaminate infant formula and other dairy powder. Contact Energy, Spark New Zealand and Tower paced the decline as the market look fully priced.

The NZX 50 Index fell 9.213 points, or 0.2 percent, to 5887.747. Within the index, 21 stocks fell, 20 rose and nine were unchanged. Turnover was $168 million.

New Zealand's listed dairy companies and the dairy futures and options market were placed into a trading halt ahead of an announcement that the Police and Ministry for Primary Industries were investigating threats to contaminate infant and other dairy formulas with pest poison, 1080. No traces had been found in any products.

Dairy companies were mixed after the trading halt lifted. Units of Fonterra Shareholders' Fund, which give holders access to Fonterra Cooperative Groups dividend stream, slipped 0.9 percent to $5.80. A2 Milk Co, the milk marketing business, rose 1.9 percent to 54 cents. Outside the benchmark index, Synlait Milk, the dairy exporter, fell 1.7 percent to $2.90.

"It had a minimal effect on their share price," said James Smalley, director at Hamilton Hindin Greene. "It hasn't had a major impact but then we need to see what happens overnight in the media, and particularly overseas reaction would be the most relevant from here."

Separately, investors looked to book profits after the benchmark index's 5.8 percent gain since the start of the year, which has been pushed higher by offshore investors seeking better returns than are on offer from fixed-income assets in a world of low interest rates.

The market has just wrapped up earnings season, which largely meet expectations with traders now looking for companies to increase dividend payments to justify higher share prices, Smalley said.

Contact fell 2.4 percent to $6.20. Tower, the general insurer, fell 2.1 percent to $2.30. Spark, formerly Telecom Corp, fell 1.8 percen to $3.24.

"Most investors have been looking for companies not to make any mistakes rather than not knock the lights out," Smalley said.

MightyRiverPower, the partially privatised energy company, fell 3.2 percent, or 11 cents, to $3.29 as it gave up rights to its 5.5 cents per share interim dividend. Vital Healthcare Property rose 0.3 percent, or half a cent, to $1.67 as it went ex-dividend for its 2 cents per share interim dividend.

Kathmandu Holdings, the outdoor goods retailer, was the best performer on the benchmark index, advancing 4.7 percent to $1.55. Data today showed a pickup in New Zealand spending on electronic cards across retail, with a 2.7 percent pick up in apparel last month.

Smalley said he expected tourists in New Zealand for the World Cricket Cup were helping support debit and credit card spending.

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