MARKET CLOSE NZ shares drop as short-term Air NZ punters sell, MRP falls

New Zealand shares fell as brokers hoping for a quick profit from the government selldown of Air New Zealand were forced to sell in a declining market and concerns about unfavourable policy changes weighed on power companies such as MightyRiverPower.

The NZX 50 Index declined 22.144 points, or 0.5 percent, 4840.364. Within the index, 29 stocks fell, 12 rose and nine were unchanged. Turnover of $523 million reflected the government's sale of 20 percent of Air New Zealand and subsequent trading at 5.2 percent below that sale price.

Air NZ tumbled 5.2 percent to $1.565, after the government achieved a price of $1.65 to reduce its holding in the airline to 53 percent. That price was near a five-year high. Some 237 million shares changed hands, amounting to about 22 percent of the stock.

"Short term, there's been a bunch of 'flippers' who have not made what they wanted and taken their bat and ball and gone home," said Matt Goodson, managing director at Salt Funds Management. "Medium term, it removes an overhang. Air New Zealand now looks very interesting versus other airlines' valuations."

MightyRiverPower fell 2.3 percent to $2.10, the lowest since the shares began trading and leading declines among some power companies. Contact Energy fell 0.6 percent to $4.92 and Meridian Energy dropped about 2 percent to its listing price of $1.

"Wholesale prices are relatively low, retail churn is quite high and the fear of change to energy policy isn't going to go away soon," Goodson said. The opposition Labour and Green parties have vowed to install a centralised electricity buying body if elected next year.

Pumpkin Patch, the children's clothing retailer, fell 8.7 percent to 84 cents after saying it expects annual earnings to be in line with 2013, and faces more downside risk for the remainder of the year.

Kathmandu, the outdoor clothing retailer, fell 3.6 percent to $3.73 after saying sales rose 0.9 percent in the first 16 weeks of the year, broadly meeting its expectations, as it looks forward to the crucial Christmas-January trading period to drive first-half earnings.

"The rag trade overall has been quite tough of late," Goodson said. "These companies are doing the right things in everything that they can control."

Chorus, which this week withdrew its dividend guidance because of uncertainty over regulated price cuts, fell 2.4 percent to $1.855. Telecom climbed 1.6 percent to $2.29. Fletcher Building fell 0.5 percent to $9.49.

Goodman Property Trust slipped about 1 percent to $1.02 after saying distributable first-half earnings rose 23 percent and affirming its guidance for full-year profit.

Sanford, New Zealand's largest listed seafood company, fell 0.9 percent to $4.46 after it posted a 5 percent decline in full-year pretax earnings as production of mussels and lower catches of tuna and jack mackerel weighed on the second half performance.

(BusinessDesk)