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MARKET CLOSE: NZ shares fall; Summerset, Diligent give up recent gains

Suze Metherell
Fri, 16 Jan 2015

New Zealand shares fell as investors looked to crystalise recent gains, Summerset Group Holdings, Diligent Board Member Services and Meridian Energy fell. Kathmandu Holdings declined as investors await the appointment of a permanent chief executive.

The NZX 50 Index fell 25.326 points, or 0.4 percent, to 5616.726. Within the index, 33 stocks fell, 10 rose and seven were unchanged. Turnover was $85 million.

The benchmark index has gained 0.9 percent since the start of the year, compared to a 4.5 percent decline in Japan's Nikkei 225 Index and Australia's S&P/ASX 200 Index drop of 2.5 percent, as investor favour the relatively high yield of the local equity market in the face of low interest rates and possibly faltering global economic growth. Today investors looked to crystalise profits in some of the year's best performers.

"New Zealand has been holding up extremely well in the face of very weak equity markets," said Paul Harrison, head of equities at Salt Funds Management. "Our market is really being driven by the rallies we're seeing in the bond markets, because a lot of the stocks in New Zealand are seen as safe yielding stocks, so we've been insulated by the big offshore moves."

Summerset, which is the NZX 50's best performer this year advancing 13 percent, declined 0.3 percent to $3.14. Diligent, which has climbed 8.9 percent since the start of the year, dropped 0.2 percent to $5.73. Meridian Energy, which has gained 7.1 percent this year, fell 1.8 percent to $1.885.

"The losers today are the ones we've seen some strength in of late," Harrison said.

Of the day's few gainers, yield stocks rose, as investor looked for cheaper options. Kiwi Property Group climbed 2.3 percent to $1.33. Spark New Zealand rose 2.1 percent to $3.235. Contact Energy gained 1.5 percent to $6.67. Property For Industry advanced 0.3 percent to $1.55. MightyRiverPower edged up 0.3 percent to $3.23.

Kathmandu dropped 1.1 percent to $1.88, its lowest level since the end of 2012. Retailers are squeezing margins to offer discounts in a bid to lure consumers back from online, offshore sellers with lower overheads. Adding to the competitive environment, investors are questioning the outdoor goods retailer's leadership as it continues to look for a new chief executive, after Peter Halkett resigned last August, ending eight years with the company.

"People are just a bit wary of the direction of the company - because you've gone from a company which had a CEO with a strategic vision," Harrison said. "You're now left with a chairman in David Kirk who is not a retailer and a temporary CEO who is very capable on an operational side, but the market would like to see some movement there on a new CEO - particularly when things are so difficult.

"You'd like to have confidence they can navigate through some particularly difficult times," Harrison said.

Metro Performance Glass was the worst performer on the day dropping 3.6 percent to $1.88. Freightways declined 1.8 percent to $5.90. Fisher & Paykel Healthcare fell 1.8 percent to $5.92. Fletcher Building, the building and construction supplies business, fell 1.8 percent to $8.09.

Infratil gained 0.8 percent to $3.015. The Accident Compensation Corp's investment arm, which manages $26.96 billion of assets to help fund the state-owned workplace insurer, lifted its stake in the infrastructure investor to 11.3 percent from 9.89 percent, buying most of the shares sold by UK investment house Utilico Investments earlier this week.

Outside the benchmark index, Synlait Milk fell 1 percent to $2.97. The dairy business, which plans to take a quarter-stake in Sichuan New Hope Nutritional Foods Co to gain a direct interest in a Chinese infant formula brand, has talked down the threat of dry conditions in Canterbury, saying its farmer suppliers have reliable access to irrigation water.

On the NZ Alternative Index, Chatham Rock Phosphate was unchanged at 20 cents. The Environmental Protection Agency's decision-making committee considering the consent for the would-be phosphate miner pushed out their decision on ruling on the project to next month after some of its members were busy over the summer holiday period.

(BusinessDesk)

Suze Metherell
Fri, 16 Jan 2015
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MARKET CLOSE: NZ shares fall; Summerset, Diligent give up recent gains
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