MARKET CLOSE: Stocks drop on global uncertainty; Telecom, Sky TV fall
New Zealand stocks fell, led by Telecom Corp after Sky Network Television announced plans to challenge the phone company in the pay-per-view television market. Rising tensions in Iraq and the outcome of the US Federal Reserves two day policy meeting eroded risk sentiment.
The NZX 50 Index fell 9.038 points, or 0.2 percent, to 5184.462. Within the index, 20 stocks fell, 21 rose and nine were unchanged. Turnover was $133 million.
Telecom fell 1.6 percent to $2.705 after Sky Network Television said it will launch a subscription video on demand service by the end of the year in a challenge to Telecom's own offering as well as ASX-listed Quickflix, Ezyflix and eventually US-based Netflix, which pioneered such offerings and will reportedly enter the local market officially in 2015. New Zealand's largest telecommunications provider is in a time of transformation, changing its name to Spark in August and chasing earnings growth in a shift away from its traditional bread and butter telecommunications service to focus on data, mobility and cloud services. It is soft-launching an internet TV service this month.
Sky Network rose 0.2 percent to $6.79.
"Everyone sort of knows that all these media and telco companies are looking to get involved in that space," said Mark Lister, head of private wealth research at Craigs Investment Partners. "Telecom is also often seen as a proxy for the New Zealand market, and if the New Zealand market is down, Telecom often is too."
Across the Asia-Pacific region markets were weaker as investors mulled escalating violence in Iraq and waited on the next monetary policy step from the US, which produced data yesterday that surprised the market, with inflation accelerating more than expected, raising the prospect of US starting to raise interest rates later this year. South Korea's Kopsi 200 Index dropped 0.7 percent in afternoon trade, Australia's S&P/ASX 200 fell 0.2 percent and Hong Kong's Hang Seng Index edged down 0.1 percent.
"People are waiting for the Federal Reserve announcement tomorrow morning," Lister said. Risk aversion crept into the market, as "people are certainly watching what is happening in Iraq and if you start to see any signs of escalation then you would see markets get even more cautious."
Skellerup Holdings advanced 1.1 percent to $1.22 after the rubber goods and dairy equipment manufacturer said it will build a $30 million factory at the Wigram Business Park in Christchurch developed by Ngai Tahu Property, to replace its earthquake-damaged facility in the suburb of Woolston.
Heartland New Zealand was the best performer on the day, up 2.2 percent to 94 cents. Yesterday the bank said it had sold 51 percent of its non-core assets, from $87.1 million to $43 million over the past five months. It had previously forecast reducing non-core property to $57.9 million by June 30.
Fletcher Building, New Zealand's largest listed company, rose 0.5 percent to $9.00. Auckland International Airport fell 1.2 percent to $3.79. Ryman Healthcare slipped 0.4 percent to $8.45.
Outside the benchmark index, Bathurst Resources jumped 10 percent to 5.5 cents after the miner said it will begin site works and extracting coal from a much reduced area of its consented Escarpment mine on the Denniston Plateau, above the South Island west coast town of Westport, following the extension of its $22 million, five-year commitment to payments for the Department of Conservation to seven years.