MARKET CLOSE: NZ shares drop on profit taking, Fed jitters

New Zealand shares tumbled as investors took advantage of weaker Chinese growth and hints of a possible end to quantitative easing in the US to take profits on companies that have propelled the NZX 50 Index to record highs this year. Telecom, Fletcher Building, Trade Me Group and Xero all fell.

The NZX 50 fell 62.34 points, or 1.4 percent, to 4526.24. Within the index, 38 stocks fell, just two rose and 10 were unchanged. Turnover was $178 million.

Stocks were weaker in Australia, pushing the S&P/ASX 200 Index down 1.7 percent in late afternoon trading. Banks and resources related companies paced the decline. Japan’s Nikkei 225 Index swung between gains and losses after plunging 7 percent yesterday.

“Markets had been priced aggressively on the upside,” said Nigel Scott, a director at Craigs Investment Partners. “Suddenly you’re seeing some of that premium coming out. It’s a healthy correction.”

Shares in Xero plunged 6.1 percent to $13, a two-week low, after it reported an annual loss of $14.4 million yesterday, while doubling of sales and customers. The cloud-based accounting software maker is on a drive to grab 1 million customers, and is forgoing profits in the short-term to achieve that growth.

Telecom declined 3.2 percent to $2.30, Fletcher Building fell 1.3 percent to $8.38 and Trade Me dropped 5.5 percent to $5.03.

Fisher & Paykel Healthcare climbed 1.3 percent to $3.24, adding to its 5.6 percent gain yesterday when it rallied on better than expected annual profit and signalled fatter earnings to come in the current financial year.

“The game’s not over for equities,” given the low yields on offer for other classes of securities, Scott said.

Ecoya was unchanged at 91 cents after the company reported a small bottom-line profit with a 28 percent gain in earnings before interest, tax, depreciation and amortisation of $1.3 million. The scented candle maker is rebranding itself to its more successful Trilogy skincare range from June 4.

Abano Healthcare fell 3.5 percent to $5.50 after London-based healthcare provider Bupa Group was granted approval to buy the Dental Corp in Australia and New Zealand, a rival dental operation to Abano’s Lumino unit.

NZAX-listed Snakk Media was unchanged at 15 cents after it announced it raised $6.5 million from an oversubscribed share purchase plan and a private placement.

Sanford fell 1.9 percent to $4.66 after the fishing group reported a 5.5 percent lift in first-half profit to $14 million and declared a 9 cent per share interim dividend. Earnings on an EBITDA basis fell as the high kiwi dollar eroded margins, it said.