Market close: share drop led by Tower, Diligent - Chorus, Abano rally

New Zealand shares fell, led by Tower and Diligent Board Members Services as the insurer flagged new capital requirements and the IT firm continued to sink in the wake of its revenue restatements.

The NZX 50 Index declined 27.197 points, or 0.6 percent, to 4548.304. Within the index, 28 stocks fell, 11 rose and 11 were unchanged. Turnover was $106.9 million, including $20 million of Chorus shares.

Tower declined 2.7 percent to $1.80 after the insurer's announcement yesterday that it may be required to hold more capital.

Diligent dropped 6.9 percent to $5.40, extending its slide since announcing it will restate revenue from recent years, the latest in a series of administrative hiccups.

"Investor confidence has been waning, with every report being negative," says Grant Williamson, a director at Hamilton Hindin Greene.

Chorus rose 4.5 percent to $3.03 after Communications Minister Amy Adams proposed a more favourable regime for Chorus to operate and upgrade its networks and build a fibre infrastructure.

Her proposal will still cut the regulated price Chorus wanted and charge for network access on the copper lines, but not as steeply as the regulator had originally suggested.

"What the government came out with was very much as a lot of us expected," Mr Williamson says. "To build infrastructure you need some guarantees around what you can charge for that. If you can't get an economic return off it then no-one is going to build it."

Telecom, which would be among Chorus customers charged more, fell 2.2 percent to $2.26.

Fonterra Shareholders' Fund rose 1.2 percent to $7.03 as the dairy company made progress in containing three batches of contaminated whey powder.

"We would hope there was a bit of a learning experience here" for Fonterra, Mr Williamson says. "The way Fonterra has handled it has not been that good."

Fletcher Building fell 0.6 percent to $8.37

Shares in Abano Healthcare surged 13 percent to $6.60 after the specialty health clinic investor batted off an offer to buy it, and now faces a full takeover proposal.

The company says it received and rejected an unsolicited non-binding indicative offer north of $100 million from a third party seeking to invest and operate in the Australasian dental sector.

Contract labour company AWF Group gained 1.7 percent to $3.05 after government figures showed workforce participation rate increased in the June quarter in another sign of an improving jobs market.

Postie Plus fell 3.2 percent to 15 cents after yesterday saying it plans to raise capital or repay debt in the face of more disappointing sales. The clothing chain this week named No 1 Shoes executive Richard Binns as its new chief executive, effective from next month.

Kiwi Income Property Trust, whose earthquake-strengthening of Wellington's Majestic Tower has been more costly than expected, was unchanged at $1.15 after Building Minister Maurice Williamson granted building owners more time to strengthen or demolish earthquake-prone buildings.

Argosy Property fell 0.5 percent to 98 cents, DNZ Property Fund was unchanged at $1.65 and Precinct Properties dropped 2 percent to $1.005.

(BusinessDesk)