MARKET CLOSE: Shares fall led Spark, SkyCity, Xero pace decline

New Zealand shares fell, led by Spark NZ and paced by SkyCity Entertainment Group and Xero, before the March 31 earnings season. Infratil rose.

The NZX 50 Index fell 15.548 points, or 0.3%, to 5757.162. Within the index, 23 stocks fell, 20 rose and seven were unchanged. Turnover was $114 million. 

Spark, formerly Telecom Corporation, is the middle of trying to drive revenue into its data and cloud-based service. Its share price fell 2.4% to $2.82 and has retreated 20% from its eight-year high of $3.535 in February. Offshore investors hold the stock for its liquidity and relatively high dividend yield.

"I think everyone believed that it was fully priced and then some but it was chased by yield," said Rickey Ward, NZ equity manager at JB Were. "I don't think it can increase its dividend to any great extent but I don't think it’s not going to pay it. If you're a US-based investor, your own economy is starting to show signs of improvement, so you've got an alternative now."

The benchmark index has climbed to record levels this year, pushed higher by international and domestic investors hunting for income-paying investments in a globally low interest rate environment. Traders are now looking toward the upcoming earnings season for companies with a March 31 balance to justify share prices. Sky City, the casino operator, declined 1.9% to $4.18. Xero, the cloud-based accounting firm, fell 1.7% to $20.01.

"We're heading into a period where you really are looking for continuation of improvement in corporate earnings to justify the prices we've been paying for them, so I think there's a lot of nervous apprehension as we head into it," Mr Ward said.

"You don't want to see a big correction but, actually, I don't think there is enough to justify further rallies."

Infratil advanced 1.8% to $3.185. The infrastructure portfolio investor announced a second special dividend payment of 6.4cps on top of its 8cps ordinary dividend, as it anticipates less capital investment in the year ahead and high prices for potential acquisitions make the company cautious. The company posted an annual net parent surplus of $384 million in the year ended March 31, compared with $199 million the previous year, reflecting the combined impacts of divestments and strong earnings from Trustpower.

"It's just further confirmation that the company is doing all the right things that you as an investor really want to hear," Ward said.

Units in Fonterra Shareholders' Fund, which gives holders access to Fonterra Cooperative Group's dividend stream, dropped 1% to a record low of $4.87.

MightyRiverPower, the state-controlled energy company, rose 3.1% to $2.97. A2 Milk Co, the milk marketing business, gained 2% to 52c.

Outside the benchmark index, Rubicon, the forestry biotech company spun out of Fletcher Challenge, was unchanged at 31c after it said it has extended its financing arrangements with ANZ Bank New Zealand and issued $US7 million in notes to its major shareholder, David Knott, and its board members.

(BusinessDesk)