MARKET CLOSE: Shares fall in global slump; Xero, Pacific Edge drop

New Zealand shares followed Wall Street lower, led by Xero and other growth stocks, as investors worried global economic growth is stalling. Kathmandu Holdings and Air New Zealand paced the decline.

The NZX 50 Index fell 55.086 points, or 1.1 percent, to 5170.053, its lowest level since August. Within the index, 42 stocks fell, four rose and four were unchanged. Turnover was a lighter-than-usual $86.1 million, with markets in Japan closed for a public holiday.

The benchmark index followed Wall Street lower, with the tech-heavy Nasdaq 10 dropping 2.5 percent on Friday, while the S&P 500 Index slipped 1.2 percent and the Dow Jones Index fell 0.7 percent on fears global economic growth was stalling. Poor economic data out of Germany has stoked concern Europe may slip back into recession, while last the week, the International Monetary Fund cut its global growth forecast for 2015 to 3.8 percent from 4 percent and warned geopolitical tensions posed a risk to "frothy" equity markets.

Xero dropped 6.3 percent to $17.95, paring its intraday decline to as low as $17.75. The cloud-based accounting software firm has fallen some 61 percent from its March high of $45.99, as investors question high valuations compared to future profit growth. Meanwhile, an escrow period for the stock, after it sold 9.95 million shares at $18.15 a piece in a $180 million capital raise last October, is coming to a close this week.

Pacific Edge, the Dunedin-based biotech company, dropped 1.1 percent to 89 cents. Diligent Board Members Services, the governance app developer, fell 1.6 percent to $4.36. Outside the benchmark index, ikeGPS Group, the remote measuring app and hardware developer, tumbled 7.1 percent to 92 cents. SLI Systems, the search engine developer, was unchanged at $1.11. Wynyard Group, the security software company, decreased 1.9 percent to $2.07.

"The macro-economic outlook seems to be the driver in the overseas market and that's why they were weaker and we're finally following suit," said Bryon Burke, head of equities at Craigs Investment Partners. " If the world is struggling to find growth, then it is going to be the growth stocks locally that are going to suffer."

Kathmandu, the outdoor goods retailer, fell 3.1 percent to $2.80. Air New Zealand, the national carrier, dropped 2.1 percent to $1.84.

Retirement villages fell, with Summerset Group Holdings declining 2.2 percent to $2.65; Ryman Healthcare down 2 percent to $7.30; and Metlifecare slipping 0.5 percent to $4.43.

Spark New Zealand, formerly Telecom Corp., fell 0.5 percent to $2.88. Fletcher Building, the country's largest listed company, slipped 0.6 percent to $8.67.

Kiwi Income Property Trust fell 0.4 percent to $1.19. The country's second largest property trust by market capitalisation has appointed Gavin Parker as chief operating officer, while Stuart Tabuteau will become chief financial officer and Mark Luther has resigned as the company's general manager of development, but will stay on as an adviser.

Fonterra Shareholders' Fund dropped 1.6 percent to $6.29. Fonterra Cooperative Group says Sri Lankan health officials have lifted a temporary ban on three batches of its Anchor milk products, after testing showed the powder was safe. Units in the fund give holders access to Fonterra's dividend stream.

Of the day's few gainers, Vector, the Auckland lines company, advanced 1.2 percent to $2.63. NZX, the stock market operator, rose 0.9 percent to $1.18. Port of Tauranga edged up 0.3 percent to $16.10 and Sky Network Television increased 0.2 percent to $6.00.

Vital Healthcare was unchanged at $1.44, as was Guinness Peat Group at 57 cents, A2 Milk Company at 58 cents and Argosy Property at $1.025.

(BusinessDesk)