MARKET CLOSE: NZ shares fall as trading again dominated by Contact; MRP, Genesis drop

New Zealand shares fell, with trading again dominated by Contact Energy, the biggest gainer on the day. MightyRiverPower, Genesis Energy and Westpac Banking Corp led the decline. Kathmandu Holdings gained after rejecting a takeover offer from Briscoe Group.

The S&P/NZX 50 Index declined 12.75 points, or 0.2%, to 5925.76. Within the index, 24 stocks fell, 18 rose and eight were unchanged. Turnover was $265 million, compared to a daily average in July of $142 million, and included $115 million of Contact.

MightyRiverPower fell 2.2% to $2.69. Genesis fell 1.7% to $1.70 after the country's biggest electricity retailer said it will close New Zealand's only large scale coal fired power station, at Huntly, by the end of 2018. Meridian Energy declined 0.2% to $2.285. Contact climbed 3.2% to $5.22 and has advanced since Origin Energy raised $1.8 billion in a bookbuild for its stake at $4.65 a share.

"Contact has always been ranked a pretty good company, with a good dividend yield but, with Origin seen as a seller, there has been no incentive to buy the shares," said Rickey Ward, New Zealand equities manager at JBWere. "Now you're seeing that buying on fundamentals coming into play."

Contact's index re-weighting following Origin's exit may also be driving demand for Contact, he said. The actual re-weighting hasn't been announced yet and the impact will depend on whether institutional investors were underweight the stock.

Kathmandu rose 2.3% to $1.75 after the company released its target company statement, valuing the company at $2.10 to $2.41, and urged shareholders to reject the offer from Rod Duke's Briscoe, which was at an implied value of $1.80. The company is forecasting a rebound in earnings for 2016, although Mr Duke said today the forecasts include "a lot of blue sky." He didn't comment on whether he would increase his offer.

"The shares are only up here because he [Mr Duke] made a bid," Ward said. "Mr Duke has a reputation for being steadfast. He can try to get to 50%, he may not try to get to 100% of the company."

Briscoe rose 2.1% to $2.96.

Westpac fell 3.6% to $37.30, reflecting a 3.7% decline in its ASX-listed shares. Australia's S&P/ASX 200 Index fell 1.4% in late afternoon trading. Australia & New Zealand Banking Group stock was halted pending an A$3 billion equity raising aimed at satisfying regulators and the size of the equity offer weighed on the banking sector.

Spark New Zealand fell 2% to $2.90 and lender Heartland New Zealand declined 1.7% to $1.16. Pacific Edge fell 1.6% to 61 cents and Metro Performance Glass dropped 1.3% to $1.55.

Vista Group International fell 0.7% to $6 after saying its Vista Entertainment Solutions subsidiary has signed a distribution agreement with software services provider Vinx Corp to sell its cinema management software in the Japanese market for the first time.

Z Energy rose 0.7% to $5.85. The Commerce Commission said it has identified a wide range of competition issues it will need to be satisfied about before it will tick through the proposed merger of Z Energy and the Chevron NZ.

(BusinessDesk)