MARKET CLOSE:NZ shares fall led by Spark; MRP, Contact fall on yield caution
New Zealand shares fell led by Spark New Zealand as investors booked profit on recent gains in regular dividend paying stocks. MightyRiverPower and Contact Energy paced the decline.
The NZX 50 Index fell 39.865 points, or 0.7 percent, to 5749.315. Within the index, 26 stocks fell, 14 rose and 10 were unchanged. Turnover was a higher-than-average $231 million, boosted by Sky Network Television shares, with 6 million changing hands in a single trade.
Yield stocks, which have been pushed higher by investors search for reliable income in a globally low interest rate environment, fell as investors looked to crystalise recent gains. Spark dropped 3.9 percent to $3.315. MRP declined 2.1 percent to $3.30. Contact fell 2.1 percent to $6.87.
"The market is certainly weaker and what we are seeing is some investors taking profit on the stocks that have had a pretty good run in recent times, particularly the electricity producers and also Spark," Grant Williamson, director at Hamilton Hindin Greene said. "Investors do expect to receive a reasonable premium over what they'd get from interest rates by buying equities and that gap has tightened up considerably follow the share market rise.
"We are probably just starting to see some investors being a little bit cautious on the whole idea of buying equities purely on dividend yield," Williamson said.
SkyCity Entertainment Group fell 1.3 percent to $3.91. Earlier this week, Prime Minister John Key said the taxpayer may have to pay up if the casino operator's Auckland convention centre exceeds its $402 million budget, although Minister of Finance Bill English has since qualified it is the government's "least preferred option". The comments have reignited debate around the deal, which came under much political scrutiny, when the government secured the building in exchange for an extension to the casino's poker machine license.
"It's not good for their reputation for all this to be played out in the media, so some investors will be a little bit cautious on that," Williamson said. "If this convention centre debate continues on then I think it could cause some weakness in the share price."
Sky TV, the nation's dominant pay-TV company, fell 0.5 percent to $5.97.
New Zealand Oil and Gas rose 1.6 percent to 63 cents. Amid falling oil prices the oil exploration company has made a full takeover bid for Cue Energy, having already taken a 20 percent stake, at 10 cents a share, valuing the company at around A$70 million. Cue rose on the ASX in afternoon trading, up 11 percent to 10 Australian cents.
"At this stage they might very well struggle to pick up significant percentage in Cue Energy at the low price of 10 cents, that's not really a premium to the market," Williamson said. "It's very positive what New Zealand Oil and Gas is doing, trying to acquire assets in what you'd consider to be the low of the oil and gas cycle."
Fisher & Paykel Healthcare gained 0.5 percent to a record close of $6.40. The breathing apparatus manufacturer exports the majority of its product, and benefits from a falling New Zealand dollar, Williamson said.
Outside the benchmark index, Livestock Improvement Corp was unchanged at $6.10 after the farmer cooperative that sells bull semen and provides a dairy genetics database posted a 10 percent gain in first-half profit to $29.7 million on increased demand for its products and services.