MARKET CLOSE: Shares decline as tensions in Ukraine weigh on investor sentiment
New Zealand stocks fell, tracking global stocks lower, as concerns about continuing tensions in Ukraine weigh on investor sentiment.
The NZX 50 fell 8.771 points, or 0.2 percent, to 5186.189. Within the index, 22 stocks fell, 18 rose and 10 were unchanged. Turnover was $152 million.
Russian President Vladimir Putin said in an open letter to European leaders that his country will demand payment in advance at a higher rate for gas supplies to Ukraine from next month, as it was now owed US$3.5 billion for gas already delivered. Ukraine has said it will cover outstanding payments as soon as Russia lowered the price.
About 15 percent of Europe's gas consumption comes from Russia through Ukraine, sparking concern Ukraine may take gas Russia has earmarked for European customers if its supplies are cut, as happened during previous disputes.
"We are a bit weaker in reaction to weaker offshore markets and a weaker Australian market today," said Grant Williamson, a director at Hamilton Hindin Greene. "It really is on Ukraine at the moment. Civil war, is it going to worsen, could it have an effect on Russia and the supply of gas into Europe. That's where the uncertainty lies at the moment with markets pretty much around the world."
Fletcher Building, New Zealand's largest listed company, dropped 0.9 percent to close at a three-month low of $9.13 on concern it may have to reduce prices as a result of the government's decision in yesterday's budget to cut tariffs on imported building supplies in a bid to improve housing affordability.
Fletcher fell "on a little bit of investor concern over what it might mean to remove the tariffs from imported building products," Williamson said. "That will obviously increase completion against Fletcher Building but what financial effect that might have will take a while to determine."
Ryman Healthcare dropped 0.6 percent to $8.65 as analysts pulled back their expectations for future earnings, citing increased costs as the retirement village developer and operator hikes caregiver salaries, adds more staff and pays more tax.
Still, the stock is in a defensive sector favoured by investors and the price declines are likely to be limited, Williamson said.
"Although we may see a little bit more weakness in that share price, I think it will be relatively short lived as investors looking for defensive growth assets, really the retirement sector can't be beaten at the moment," he said. "Any further falls in the share price will certainly bring the buyers back into the stock."
Goodman Fielder advanced 1.4 percent to 74 cents on the NZX after being removed from a trading halt. Singapore-based Wilmar International and Hong Kong-listed investment firm First Pacific Co have sweetened their takeover bid for the Australasian food ingredients maker by A$100 million, but said it won't go any higher without a rival offer. The companies are offering to pay 70 Australian cents a share, or A$1.37 billion, for full control of Goodman, up from a previous bid of 65 cents, or A$1.27 billion, they said. Its ASX-listed shares were down 1.5 percent to 66.2 Australian cents in afternoon trading.
Briscoe Group, which operates the Rebel Sports and Briscoes Homeware stores, advanced 0.8 percent to $2.48. The company, which is sitting on more than $50 million in cash, is eyeing up a major acquisition this year as it looks to expand, Radio New Zealand quoted managing director Rod Duke as saying following yesterday's annual meeting.
"Briscoe does have an extremely strong balance sheet," Williamson said. "They have been looking for another acquisition or another brand for a while now. It would be nice to see them add another label to their stable."
Duke was confident he could improve the company's gross profit margin and bottom line this financial year, RNZ said.