MARKET WRAP: NZ shares fall with Comvita and A2 Milk

New Zealand shares fell today, led by a poor day of trading for Comvita and A2 Milk.

The S&P NZX 50 index was down 41 points to 8615, on turnover of $105 million. The New Zealand dollar dropped below 69USc after softer than expected retail spending for the first quarter.

Harbour Asset Management analyst Shane Solly says global equity markets have “come off the boil” lately after a strong recent run. That was driven by China-US trade negotiations and weaker global economic activity, he says.

Closer to home the market was hit hard by falling shares in Comvita, A2 Milk and Spark.

Comvita shares tumbled 54c, or 7.98%, to $6.23 after confirming talks with a potential bidder for the company had ended.

In April, chief executive Scott Coulter had hinted at a possible overseas takeover, and was party to a confidentiality agreement with a third party who was doing due diligence. At the same time it announced its after-tax operating earnings for the financial year ending June 30 are likely to fall from $17.1 million to the range of $8-11m.

“The market is a bit anxious as to whether Comvita can keep growing as it has in the past,” Mr Solly says.

Last week A2 Milk shares fell 12.8% despite the infant formula company reporting a 70% sales increase for the nine months ended March.

Today A2 shares fell a further 26c (2.3%) to $11.04 despite the stock's pending inclusion into the MSCI New Zealand index on June 1.

Mr Solly says A2 is relabelling some of its products for the Chinese market, creating a short-term sales slowdown.

Kiwi Property Group shares dropped 2.16% to $1.36 after it announced a fall in profit in its annual results today.

The company says its annual earnings rose 8.2% to $111.3 million for the 2018 financial year, despite a fall in bottom line profit of $1.2m, or 1.19%, to $120m.

Spark shares also dropped 1.69% to $3.48. Mr Solly says the stock is sensitive to US bond yields.

Goodman Property Trust shares gained 1.42% to $1.43, after selling Wynyard Quarter office assets to Blackstone for a “very solid” $635m, Mr Solly says.

Vista recently signed an agreement with Japan’s largest cinema chain, Aeon Entertainment, a deal that saw its shares continue to gain 1.47% to $3.45.

Sky Network Television was steady on $2.35, despite international broadcast TV production company NEP announcing it will take a stab at the New Zealand market.

Pushpay shares regained some of their losses from last week - the stock closed up 2% to $4.07.

Investors will be keeping an eye on further results (including Sanford and Metro Performance Glass) as well as a couple of economic indicators, retail sales and migration figures, all due this week.

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