MARKET CLOSE NZ shares fall as Chorus slide continues, Xero loses steam

New Zealand shares fell today as uncertainty over Chorus's future extended the network operator's slide and as Xero's rally to new highs ran out of steam.

The benchmark NZX 50 index fell 21.877 points, or 0.4 percent, to 4922.691, having hit a new record yesterday. Within the index, 21 stocks fell, 22 gained and seven were unchanged. Turnover was $148.5 million, driven by Xero and Sky Network Television.

Chorus sank 9.9 percent to $2.10, a record low close since it was demerged from Telecom Corp two years ago, after Communications Minister Amy Adams said will independent review the telecommunications network operator's books as it considers the best way to respond to the Commerce Commission-enforced price cuts to Chorus's copper network service.

"Chorus's dividends are definitely under threat, leaving investors uncertain as to policy changes," said Shane Solly, a portfolio manager at Mint Asset Management in Auckland. "That's what stock markets do," he said, referring to the slump in share price.

Xero dropped 8.9 percent to $34, trimming the cloud accounting software developer's gain this week to 15 percent. The Wellington-based company's gains have propelled its market capitalisation to $4.34 billion, and it was briefly the second-largest on the exchange.

"A lot of people not normally involved in the stock are getting involved, and you hope people have done their homework," Solly said. "It's been re-rated quite significantly."

Diligent Board Member Services, the governance app developer, dropped 4.7 percent to $4.47 after it added a new independent director to its board, while gold miner OceanaGold declined 4.1 percent to $2.09 and insurer Tower fell 1.7 percent to $1.77.

State-controlled power company MightyRiverPower fell 0.9 percent to $2.19 after it lifted annual guidance on net profit due to cheaper interest costs and gains on financial instruments, while affirming its forecast growth in earnings before interest, tax, depreciation, amortisation and fair value adjustments.

"It's just got to prove itself to shareholders," Solly said.

Sky TV gained 1.1 percent to $6.34 after rival free-to-air broadcaster MediaWorks said it didn't reach a new agreement with the Fox network and will pull all that content from tomorrow when it emerges under new ownership.

Retailers led gainers on the day, with outdoor equipment chain Kathmandu Holdings up 5.7percent to $3.88, jeweller Michael Hill International rising 3.2 percent to $1.66 and Warehouse Group gaining 2.4 percent to $3.89. Fast-food franchiser Restaurant Brands advanced 1.4 percent to $2.98.

Service station chain Z Energy fell 0.5 percent to $3.84 after the Wellington-based firm lifted first-half earnings 7 percent, as it fattened its margins by eschewing discount-hungry petrol customers.

Postie Plus was unchanged at 11 cents after the retailer said yesterday its annual loss was bigger than it thought in its unaudited results due to a larger writedown on its inventory.

Fletcher Building, the biggest listed stock, gained 0.2 percent to $9.52, while Telecom declined 0.9 percent to $2.285.

(BusinessDesk)