MARKET CLOSE: NZ shares drop pre-reporting season, Sky TV, Meridian and Spark lead decliners

New Zealand shares dropped today as investors booked profits ahead of reporting season, with the main index led lower by Sky Network Television and Meridian Energy.

The S&P/NZX50 Index fell 51.8 points, or 0.7 percent, to 7,277.4. Within the index, 34 stocks fell, 12 rose and five were unchanged. Turnover was $160.5 million.

"We've come off the boil a little bit - the weakness we're seeing offshore is flowing through to local investors and a few of them are deciding to take some profits ahead of the financial reporting season," said Grant Williamson, director at Hamilton Hindin Greene. "Investors are maybe a bit cautious ahead of reporting season, and it's not surprising given what our market has achieved in recent times. Every week in July improved, and the market gained 6.5 percent in the month, so it's not surprising August has started on a bit of a weaker note."

Williamson said there was specific profit taking in some stocks which did well in July, such as Sky Network Television, Meridian Energy and Spark New Zealand.

Sky TV fell 2.8 percent to $4.90, Meridian dropped 2.5 percent to $2.785 and Spark declined 2.1 percent to $3.78. All three stocks gained in July, with Meridian up 7.3 percent and Spark rising 11.8 percent that month.

Due to the continuous disclosure obligations listed companies have, investors are unlikely to be surprised by the size of profits in this reporting season, so outlooks will determine market reaction, Williamson said.

"It will be the forward comments that are going to lead the market one way or another - with some relatively high share prices, we really do need to start seeing some earnings growth from our larger companies in order to see share prices go higher," he said.

Kathmandu Holdings dropped 2.3 percent to $1.73 and Mercury New Zealand fell 1.9 percent to $3.03.

NZX fell 1 percent to $1.04. Cash market trading volumes fell in July, led by a drop in equities, although a 6.5 percent gain in the S&P/NZX 50 Index meant the value of trading was still higher than in the year-earlier month. Total trades last month fell 5.6 percent from a year earlier to 122,670, according to NZX's monthly shareholder metrics. The total value traded rose 3.6 percent to $3.4 billion.

Skellerup Holdings was the biggest gainer, up 1.5 percent to $1.36, while Heartland gained 1.5 percent to $1.37 and Xero rose 1.1 percent to $19.90.

Outside the main index, Briscoe Group rose 2.8 percent to $3.36. The retailer said first-half profit rose at least 32 percent as it widened gross margins on more rigorous promotions and inventory management at the same time as lifting sales. The shares have climbed 14 percent so far this year, tracking a similar gain on the S&P/NZX All Index.

Infratil declined 0.6 percent to $3.38. The investor and Australia's Commonwealth Superannuation Corp have paid A$82.5 million for the 30-year contract to manage nine on-campus purpose-built student accommodation (PBSA) residences for Australian National University in the Australian capital Canberra.

Millennium & Copthorne Hotels New Zealand gained 4.4 percent to $1.88. The hotel owner, which has a controlling stake in property developer CDL Investments, posted a 98 percent jump in first-half profit as it benefited from the nation's tourism boom, strong sales from CDL and a one-time insurance gain.

(BusinessDesk)

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