MARKET CLOSE: Shares fall led by Genesis, Meridian rebounds

New Zealand shares fell, led by Genesis Energy after the partially privatised power company cut its earnings forecast. Meridian Energy advanced as investors returned to the sold-down stock.

The NZX 50 Index fell 28.836 points, 0.5 percent, to a two month low of 5740.816. Within the index, 31 stocks fell, 12 rose, and seven were unchanged. Turnover was $128 million.

Genesis led the benchmark index lower dropping 7.6 percent to $1.995, its lowest level since last November. New Zealand's largest energy retailer cut its forecast for annual earnings to between $330 million and $345 million in the year ending June 30, lower than its $363.4 million prospectus estimate from March last year. It said it lost electricity and gas customers amid increased competition and as wholesale electricity prices declined. The slump in global oil prices has also cut earnings from the Kupe oil and gas field.

"It's come out with a profit downgrade to do with reduced prices it gets on the Kupe oilfield and also the subdued demand for electricity," James Smalley, director of Hamilton Hindin Greene said. "That, combined with the fact investors just recently received notification of their bonus shares, and that could well have lead to a bit of selling on the market anyway."

Meridian was the best performer on the benchmark index, rising 2.6 percent to $1.945. The energy retailer and generator was listed in October 2013, with the shares offered in instalment receipts to sweeten the offer, with $1 upfront and the promise of full entitlement to dividends, and the remaining 50 cents due next month. The stock is rebounding after being sold off by investors who were looking to cash in gains to pay for the installment.

"It's the tale of two power companies," Smalley said. "Most people who would have been selling Meridian to take up Meridian (to profit and then take up the instalment) have probably done their bit recently. Who knows, there might a bit of secular switching from Genesis into Meridian. The buyer might be thinking Meridian is cheaper because of the selldown ahead of the receipt call."

Tower last traded at $2.205. Before trading opened this morning the general insurer requested a trading halt on the New Zealand and Australian stock exchanges as it reviews its Canterbury quake provisions and flags a "material impact" ahead of reporting its first-half earnings next month. Earlier this month it said it had, through its reinsurance programme, increased its level of cover for the remaining Canterbury rebuild, amounting to an extra $50 million related to the February 2011 earthquake.

MightyRiverPower, the government controlled energy company, fell 2.5 percent to $2.93. Contact Energy dropped 1.8 percent to $5.52.

Chorus, the telecommunications infrastructure builder, gained 1 percent to $3.00. Spark New Zealand, formerly Telecom Corp, rose 0.5 percent to $2.875.

Outside the benchmark index, Kirkcaldie & Stains was unchanged at 1.68. The Wellington department store turned to a first-half loss as sales fell and it wrote down a deferred tax asset. The loss was $501,000 in the six months ended Feb. 28, from a profit of $563,000 a year earlier.

(BusinessDesk)