Market close: shares fall as investors prepare for MRP to join Top 50 index

New Zealand shares fell for a third session, led by Tower, as institutional investors reweight their portfolios ahead of Mighty River Power's addition to the Top 50 index next week.

The NZX 50 Index fell 25.079 points, or 0.6 percent, to 4538.306. Within the index, 31 stocks fell, 10 rose and nine were unchanged. Turnover was a lower-than-average $119.4 million.

MRP fell 0.8 percent to $2.38 on turnover of $36.6 million as fund managers build their exposure to the stock in anticipation of its entry to the benchmark index.

"As a result of that inclusion, there are a whole lot of down-weightings that occur. That's having a bearing on the market," says Rickey Ward, head of equities at Tyndall Investment Management. "They are readjusting or rebalancing their funds on the expectation of what they will look like come opening on Monday."

Among companies with high turnover, Fletcher gained 0.1 percent to $8.48, Telecom declined 1.1 percent to $2.29 and Sky Network Television was unchanged at $5.33.

Insurer Tower led decliners, falling 4 percent to $1.90. The company is in talks with the Reserve Bank over its insurance licence and may face stricter solvency requirements.

Port of Tauranga fell 2.4 percent to $14.15.

Cloud-based accounting firm Xero led gainers, rising 3.8 percent to $17, and outdoor equipment retailer Kathmandu advanced 2.3 percent to $2.70.

Wynyard Group, the intelligence software maker, fell 3.5 percent to $1.11 on its debut, with investors selling the stock from the outset of trading.

"A whole lot of people participated in it and they got 100 percent of their allocation, which is never really a good sign," Mr Ward says. "I think people got an exposure that they didn't really expect or didn't want. So they are selling risk - selling stock that they didn't expect to get."

Stock exchange operator NZX fell 0.8 percent to $1.33. Dairy processor Synlait Milk is set to list on Tuesday next week. Alternative milk processor A2 Corp rose 1.5 percent to 68 cents and units in the Fonterra Shareholders' Fund gained 0.4 percent to $.750.

Auckland International Airport, the country's biggest gateway, fell 1 percent to $3.04 and Air New Zealand, the state-controlled national carrier, rose 0.3 percent to $1.47 after government figures showed a seasonally adjusted 1.5 percent fall in the number of international visitors last month.

Cavalier Corp was unchanged at $1.62 after rival carpet maker Godfrey Hirst announced plans to cut 50 staff at its Dannevirke plant.

PGG Wrightson fell 3.1 percent to 31 cents after telling shareholders to expect a low-ball offer from Australian John Armour's Washington Securities.

Heartland New Zealand, whose shareholders will get a similar offer from Armour, dropped 2.3 percent to 84 cents.

(BusinessDesk)