MARKET CLOSE: Shares fall on China fears; Spark, ANZ, Westpac drop

New Zealand shares fell for a seventh day as offshore concerns overshadowed the local reporting season. Spark NZ, Australia & New Zealand Banking Group and Westpac Banking Corp fell.

The S&P/NZX 50 Index fell 41.25 points, or 0.7%, to a seven month low of 5696.44. Within the index, 35 stocks fell, 10 rose and five were unchanged. Turnover was a heavier than usual $214 million.

Markets have been rattled after China unexpectedly allowed its currency to weaken this week, following recent poor economic data and in a bid to help exporters in Asia's largest economy. The move pushed the kiwi dollar lower, causing offshore investors to sell New Zealand equities as the value of their investments shrank.

Stocks often held by offshore investors fell. Spark, formerly Telecom Corp, declined 2.6% to $2.66. ANZ fell 1.3% to $33.08. Westpac slipped 1.3% to $35.22.

"We have seen significant weakness in commodity currencies around the world, of which we are considered one," said James Smalley, director at Hamilton Hindin Greene. "Our currency comes off and you're a foreign investor in New Zealand equities, unless you got it hedged, you're going to start wearing it a bit on the foreign exchange side of things."

The steps taken by Chinese regulators also stoked concerns about the strength of consumer demand in China, which might eat into New Zealand firms exporting into the world's most populous nation.

Companies with global exposure also fell. Mainfreight declined 1% to $14.85. Freightways fell 0.9% to $5.55.

"You've also got to look at domestic based stocks – and our major export earner will be earning us a bit less and what impact is that going to have on the economy in 12 to 18 months' time?" Mr Smalley said.

The wider global concerns overshadowed the local reporting season which is under way, Smalley said. Nuplex Industries, which makes resins used in industrial coatings and paint, fell 0.7% to $4.15, after the company announced a 35% increase in annual profit to $70.8 million, beating expectations, on earnings growth in Europe and Asia.

Steel & Tube Holdings fell 2.1% to $2.75. New Zealand's biggest steel distribution company posted a 20% gain in full-year profit to $21.4 million and said recent acquisitions will be a buffer to slowing economic growth and weakness in global finished steel prices.

Contact Energy rose 0.2% to $5.16. ASX-listed Origin Energy sold its controlling stake in Contact for $4.65 a share last week, vastly boosting the liquidity and market weighting of the stock.

"The selldown was extremely well over-subscribed," Mr Smalley said. "You know there must be a lot of unrequited demand that's actually buying the stock on the market."

Fisher & Paykel Healthcare, which earns most of its income in the US, gained 0.3% to $7.54, as a weaker kiwi boost its earnings, Mr Smalley said.

Auckland International Airport fell 0.4% to $5.20. The airport company expects the value of its buildings and services, runway, taxiways and aprons assets within the property, plant and equipment portfolio to increase by about $109 million when it reports earnings for the year ended June 30, along with a revaluation expense of $12 million, it said in a statement. It last valued the assets for the 2011 financial year.

Fonterra Shareholders' Fund, which gives holders access to Fonterra Cooperative's dividend stream, rose 0.8% to $4.84, the biggest gainer on the day.

Pacific Edge led the benchmark index lower, down 6.6% to 57c.

Outside the benchmark index, Michael Hill International was unchanged at 95c. The founder of the eponymous jewellery business is stepping down to make way for his daughter Emma Hill to succeed him in the chair, as the company reduced its dividend to fund growth

(BusinessDesk)