MARKET CLOSE: Shares fall as investors make room for Genesis, shed property

New Zealand shares fell as investors made room in their portfolios ahead of the government's Genesis Energy initial public offer next month. Property stocks paced the fall as rising interest rates made the sector's yield less attractive.

The NZX 50 Index fell 5.807 points, or 0.1 percent, to 5124.888. Within the index 24 stocks fell, 18 rose and eight were unchanged. Turnover was $137.3 million.

Investors sold shares to make room in their portfolios for the next partial privatisation, of which 40 percent has been set aside for institutional investors and local broking firms. The government today said it will sell the maximum 49 per cent of Genesis Energy after feedback from institutions gave it confidence it didn't need to reduce the size of the sell-down.

"There is a little bit of weakness in the market today and it comes from investors raising funds for Genesis, but they're certainly not doing it from energy stocks, if anything those are going the other way," said James Smalley, a director at Hamilton Hindin Greene. "The recent IPO stocks, MightyRiver and Meridian, have come in for the buying because perhaps investors or institutions were a little bit underweight in those stocks pending Genesis."

Energy stocks rose, with Meridian Energy leading gainers, up 2.2 percent to a record $1.14. MightyRiverPower climbed 1.6 percent to $2.18, while lines company Vector rose 0.4 percent to $2.42, and Contact Energy declined 1.1 percent to $5.23.

Property stocks paced the day's decline with the Reserve Bank's move to higher interest rates detracting from the appeal of the stocks, which typically deliver a high dividend yield.

Goodman Property Trust fell 1.6 percent to 95.5 cents. Property for Industry dropped 1.2 percent to $1.27. Precinct Properties declined 1 percent to $1.005 as did DNZ Property Fund to $1.52. Kiwi Income Property slipped 0.9 percent to $1.12 and Argosy Property fell 1.1 percent to 95 cents.

"Property stocks are normally the ones most affected by rising interest rates because the relative attractiveness of the yield drops," Hamilton Hindin Greene's Smalley said.

Units in the Fonterra Shareholders' Fund fell 1.1 percent to $6.50 after Fonterra Cooperative Group reported a 53 percent drop in first-half earnings on shrinking margins. The units give investors exposure to the dairy exporter's dividend.

Fletcher Building, New Zealand's largest listed company, declined 2 percent, or 19 cents, to $9.42 after shedding rights to its 18 cents per share interim dividend.

Sky Network Television led the benchmark index lower, dropping 3.4 percent to $6.27. Xero, the cloud-based accounting software company, fell 1.3 percent to $43.45.

Auckland International Airport rose 0.3 percent to $3.87. Telecom advanced 0.2 percent to $2.395 and SkyCity Entertainment Group gained 0.3 percent to $3.89.

(BusinessDesk)