MARKET CLOSE: Stocks fall, paced by Xero, Warehouse
New Zealand stocks fell as investors sold shares to raise cash ahead of several new listings and insitutions squared their books ahead of the financial year's end on June 30. Xero fell to an eight-month low as investors sought to secure tax losses ahead of the end of the Australian financial year. Warehouse Group extended its losses after an earnings downgrade last week.
The NZX 50 Index fell 18.868 points, or 0.4 percent, to a month low of 5126.164. Within the index, 14 shares fell, 22 rose and 14 were unchanged. Turnover was $132.3 million.
Serko, the online business travel booking company, is due to debut on the NZX tomorrow morning, raising some $17 million as it sells 15.5 million of new shares at $1.10 apiece, and a further 4.5 million existing shares worth $5 million will be sold into the offer. The Auckland-based company closed its public pool early and said those investors may receive fewer than the number of shares requested because of strong demand. Gentrack, which develops utilities and airports software, will list the following day on Wednesday in a $99.1 million initial public offer, selling shares at $2.40 apiece.
"Now there is a reasonable line up of IPOs coming to the market, we could be seeing a continuation of people taking money out of the market to invest in these new IPOs," said James Smalley, a director at Hamilton Hindin Greene.
Other companies set to list on the NZX include, Hirepool on July 11 and Scales Corp on July 26, while IkeGPS released its prospectus today.
Xero, the cloud-based accounting software firm, dropped 7.3 percent to $25.90 and has declined 20 percent year to date, after more than trebling its share price in 2013. Some Australian institutional investors are sitting on a loss from their investment in Xero and would want to sell the shares within 12 months of their purchase so they could claim tax losses at the end of their financial year, Smalley said.
Pacific Edge, the Dunedin-based biotech company, fell 4.7 percent to 81 cents, and has declined 39 percent since the start of this year. Diligent Board Member Services, the governance app maker, declined 3.4 percent to $4.25 and has slipped 39 percent in the past year.
"It does seem to be those momentum play of seven, eight, nine months ago are the ones that are really seeing a bit of sell off, particularly in the last week or so, and I do wonder if it is a bit of tax-loss related selling," Smalley said.
OceanaGold led the benchmark index lower, falling 9.3 percent to $3.40.
Warehouse Group, New Zealand's largest listed retailer, slipped 1 percent to a 17-month low $3.03. Last Friday the retailer said it expects adjusted full-year profit of $59 million to $62 million, down from its March forecast for $67 million to $71 million, and lower than last year's $73.7 million.
Kathmandu Holdings, the outdoor goods retailer, was the best performer on the day, up 4.4 percent to $3.56.
"Kathmandu and Briscoe on the market here have been stand-out retailers, and the results that have disappointed the market, in particular Warehouse and Hallentstein Glasson, does show you there is money to be made in retail, but you've got to be really on top of your game," Smalley said.
Outside the benchmark index, clothing chain Hallenstein fell 3.9 percent to $3.00 while Briscoe, the sporting goods and homeware retailer, rose 1.2 percent to $2.58.
Telecom Corp, New Zealand's largest telecommunications provider, fell 0.6 percent to $2.665. Fletcher Building, the country's largest listed company, was unchanged at $8.82.