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MARKET CLOSE: NZ shares follow ASX lower, paced by Spark, Xero

30 Mar 15

New Zealand shares fell paced by Xero, Spark New Zealand and other dual listed stocks as investors across the Tasman sold off stocks after a major capital raising. Meridian Energy fell ahead of its instalment receipt coming due.

The NZX 50 Index fell 32.959 points, or 0.6 percent, to 5821.289. Within in the index, 31 stocks fell, 11 rose and eight were unchanged. Turnover was $103 million.

In Australia the S&P/ASX 200 Index dropped 1.3 percent in afternoon trading as investors sold off stocks after a A$4.5 billion capital raise for Caltex and a A$1 billion capital raise for Slater and Gordon. Dual-listed stocks weighed on the local bourse. Trade Me Group, the online auction site, led the benchmark index lower down 2.7 percent to $3.68. Spark, formerly Telecom Corp, dropped 1.7 percent to $2.93. Xero, the cloud-based accounting software developer, declined 2 percent to $24.30. Orion Health Group, the healthcare software firm, slipped 2.4 percent to $4.83. Kathmandu Holdings, the outdoor goods retailer, declined 2.2 percent to $1.35. Fletcher Building, the building supplies and construction firm, dropped 1.1 percent to $8.44.

"Clearly the Australian market is down a bit harder than the New Zealand market and some of those dual-listeds are being knocked around by that," said Shane Solly, director at Harbour Asset Management. "You've got two massive capital raisings in Australia. The market is weaker on the back of capital raising."

Warehouse Group fell 0.7 percent to $2.84. After the close of trading the retailer announced chief executive Mark Powell will retire next February. The retailer has come under pressure from analysts and investors who say they want the company to start producing profit growth after spending hundreds of millions of dollars overhauling stores and buying new businesses the past few years. Powell, who has led the upgrade programme after taking over almost four years ago, previously expected annual profit growth to resume this financial year but lowered the forecast for earlier this month.​ ​

Meridian fell 1 percent to $2.03. The partially privatised energy company listed on the bourse in October 2013, with the shares offered in instalment receipts to sweeten the offer, with $1 upfront and the promise of full entitlement to dividends, and the remaining 50 cents in May 2015. Some investors are selling the stock ahead of the receipts coming due, Solly said.

Pacific Edge, the biotech firm which makes non-invasive bladder cancer tests, rose 1.3 percent to 78 cents. The company is building up its patents across the globe, with a focus on the US where it hopes to see its tests adopted by healthcare providers.

"We are coming to a period of time where people are thinking about them getting US approval funding for their testing," Solly said.

Air New Zealand, the national carrier, was the best performer on the day up 1.7 percent to $2.71.

Outside the benchmark index, Synlait Milk dropped 8.6 percent to $2.75. The dairy company, which has taken a cornerstone stake in Sichuan New Hope Nutritional Foods Co to gain direct interest in a Chinese infant formula brand, fell after it turned in a first-half loss of $6.4 million from a profit of $12.1 million and cut the outlook for its full-year profit. It blames volatility in the international dairy market, delays in getting approval under a new Chinese regulatory system and an increase in costs as it builds new plants to focus on niche, high-end value products.

"In theory, a fall in the milk price should be helpful because obviously that's an input," said Matthew Goodson, managing director at Salt Funds Management, which doesn't hold the stock. "But a fall in the milk price doesn't occur in isolation. It's occurring because demand is changing for all this great variety of end products that there are in the market."

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