MARKET CLOSE: Shares fall for a second day on China fears

New Zealand shares fell for a second day in a regional selloff as a new Chinese regime allowing the market to devalue the yuan stoked concerns about the strength of the world's second biggest economy and the nation's biggest trading partner.

Nuplex Industries, Sky Network Television and Xero declined.

The S&P/NZX 50 Index fell 65.14 points, or 1.1%, to 5757.21. Within the index, 35 stocks fell, seven rose and eight were unchanged. Turnover was $166 million.

Stocks across Asia fell after China allowed its currency to weaken for a second time in as many days, following recent poor economic data and in a bid to help exporters in Asia's largest economy.

The move spooked investors, creating uncertainty on what impact it will have on the local economy. Australia's S&P/ASX 200 index was down 1.8% in afternoon trading, while Japan's Nikkei 225 index dropped 1.8%.

Nuplex, the specialty chemicals maker, led the benchmark index lower down 3.9% to $4.16. Sky TV, the country's dominant pay television provider, dropped 3.1% to $5.71. Xero, the cloud-based accounting software firm, declined 3.2% to $16.24. Fletcher Building, the construction and building supplies firm, fell 2.1% to $7.64. Spark New Zealand, formerly Telecom Corp, slipped 2.5% to $2.77.

"The further policy change in China is obviously stimulating activity today," Harbour Asset Management director Shane Solly says. "It has an impact on things like demand for commodities.

"We've seen when the yuan gets reduced in value against the US dollar, which it has, it reduces the buying power, whether it is commodities, whether it is consumption, so there is a readjustment.

"It is reasonable to expect that we'd see other moves in other countries in reaction as they attempt to maintain their competitiveness against China. There is a little bit of uncertainty around that."

Local earnings season continued. SkyCity Entertainment Group fell 1.9% to $4.21. The casino and hotel company lifted full-year profit 31% to $128.7 million as an improved win rate for its international business and strong growth in Auckland made up for a disappointing performance in Adelaide.

"It was a mixed result - Auckland was strong as expected, while Adelaide and Darwin were a little concerning," says Matthew Goodson, who holds SkyCity shares among the $700 million in funds he helps manage at Salt Funds Management. "Overall the result was in line to slightly below expectations. They have spent a lot of money at Adelaide and the earnings aren't really coming through  as one would hope. Darwin is just a little soft as well," he says.

Vital Healthcare Property Trust fell 1.2% to $1.65. The hospital owner and developer increased annual earnings 4.6% to $36.4 million, beating estimates, as it generated increased rents from an expanding Australian business, while flagging a bigger return for investors in 2016.

Of the day's few gainers, Orion Health Group, the health management software developer, was the best performer up 2.1% to $3.97.

On the NZAX, Just Water International was unchanged at 14c. The water cooler and supplies business, 79% owned by founder Tony Falkenstein, will shift its bottling plant and head office to a new site in Auckland that it has bought for $3.3 million.

(BusinessDesk)