MARKET CLOSE: Shares slip from record led by Spark; Air NZ extends gain
New Zealand shares fell from a record, led by Spark New Zealand, as investors locked in gains ahead of next month's general election, which is creating some uncertainty in markets. Air New Zealand rose for a second day after posting a 45 percent gain in annual profit.
The NZX 50 Index fell 6.186 points, or 0.1 percent, to 5237.514. Within the index, 16 stocks fell, 26 gained, eight were unchanged. Turnover was $93.9 million.
The benchmark index slipped from its high as investors looked past earnings season to the general election next month. An NZ Herald-DigiPoll survey today showed the incumbent National Party is likely to return for a third term in government, though recent polls have shown declining support for the administration.
"Investors are looking to book profit," said James Smalley, director at Hamilton Hindin Greene. "Once we get through reporting season, the next big thing will be the election on September 20. Obviously there is a bit of water to go under the bridge there, and that could create quit a bit of uncertainty, and markets don't like uncertainty."
Stocks that have gained in recent days paced the decline on the benchmark, with Spark, formerly Telecom Corp, falling 3.1 percent to $2.945 from a six-year high. Ryman Healthcare, the retirement village operator, dropped 2.2 percent to $8.00, having advanced 2 percent over the past week. Tower, the general insurer, declined 1 percent to $1.98, after rising above the "psychological barrier price" of $2.00 yesterday.
Air NZ advanced 1.8 percent to a two-month high $2.215, extending yesterday's gain after the national carrier lifted annual profit for third consecutive year to $262 million. Meanwhile, trans-Tasman rival Qantas Airways booked a A$2.84 billion loss as it wrote down the value of its international fleet and faced restructuring and redundancy costs. The numbers also showed its kiwi discount airline, Jetstar Airways, had lost market share in New Zealand. While Air NZ enjoys a virtual monopoly on many domestic routes, Qantas faces stiff competition from discount airlines such as Virgin Australia, which Air NZ has a 20 percent stake, and Tiger Airways.
"The contrasting performance of the two airlines really shows you the difference," Smalley said. "One has very strong market dominance and a monopolistic way in its domestic market, versus Qantas which has very very strong competition both on its international routes, and also on its domestic routes."
A2 Milk Co was unchanged at 65 cents. The company which markets milk with a protein variant said to have health benefits said annual profit tumbled to $10,000 from $4.1 million a year earlier. It plans to ramp up its expansion in the US, the UK and Asia using cash generated in its biggest market of Australia after a year in which a strong kiwi slashed the value of sales.
NZX was unchanged at $1.23. The stock market operator revealed its new market with lighter disclosure requirements will be called NXT, as it waits on the final go-ahead from the Financial Markets Authority.
Fletcher Building, New Zealand's largest listed company, advanced 0.7 percent to $9.29.
Pacific Edge was the best performer on the day rising 2.5 percent to a two-month high of 82 cents, after the Dunedin-based biotech company said Kaiser Permanete, which has more than nine million healthcare users in the US, would trial its non-invasive bladder cancer detecting test, Cxbladder. That added to its 8.1 percent gain yesterday.
Outside the benchmark index, Airwork Holdings rose 3.8 percent to $2.75 after the aviation services firm, which listed last December, boosted annual profit 52 percent to $9.83 million on the strength of its helicopter engineering unit, beating guidance.
Hellaby Holdings fell 5.3 percent to $2.99 after the diversified investment company sank into the red by $1.1 million in the latest financial year, from a previous profit of $18.2 million, as it wrote down the value of its footwear unit in a flat retail market. Still, it sweetened its dividend as underlying earnings grow. Stripping out a $26.8 million charge on the goodwill of its Hannahs and Number One Shoes brands, earnings rose 44 percent to $26.8 million,