MARKET CLOSE: Shares fall on China jitters, Xero, Pacific Edge decline

New Zealand shares fell in a broad based sell off, as China's stock market volatility spooked investors. Pacific Edge, Xero and Heartland New Zealand all declined.

The S&P/NZX 50 Index fell 23.68 points, or 0.4 percent, to 5848.38, recovering from an intraday drop to as low as 5838.5. Within the index, 37 stocks fell, eight rose and five were unchanged. Turnover was $108 million.

Investors sold local equities after the Chicago Options Board Exchange's Volatility Index, known as Wall Street's 'fear gauge', rose to a two-week high while stocks fell on Wall Street and in Europe after an 8.5 percent slump in China's Shanghai Composite index yesterday. The Chinese benchmark's decline was more muted today, down 1 percent in afternoon trading.

The prospect of a slowing Chinese economy is weighing on commodity exporters such as Australia and New Zealand, which rely on the world's second biggest economy buying their raw materials, and prices for iron ore, Australia's biggest commodity export, have been under pressure over the past week.

Kiwi stocks fell. Pacific Edge, the biotech firm, led the benchmark index lower down 4.8 percent to 60 cents. Xero, the cloud-based accounting firm, fell 2.4 percent to $17.72. Heartland, the bank, declined 3.4 percent to $1.13.

"Offshore markets were weaker last night and we certainly opened weaker, but the Chinese market is not performing too badly although it is still quite volatile," said Grant Williamson, director at Hamilton Hindin Greene said. "It is making investors a little bit more cautious but they're not giving it a huge amount of focus. We saw with the Greek situation these issues seem to come and go."

Sky Network News, the dominant pay television provider, declined 2.1 percent to $6.03. NZX, the stock market operator, fell 1.9 percent to $1.05. Auckland International Airport, the nation's busiest gateway, slipped 0.6 percent to $5.26.

Of the day's few gainers, Summerset Group was the best performer on the day, up 2.9 percent to $4.24. The country's third-biggest listed retirement village operator has bought a 2.3 hectare site in Auckland's Parnell, which it plans to develop as a premium site.

Kathmandu Holdings fell 1.7 percent to $1.70. The outdoor goods retailer is in the middle of a takeover offer from Briscoe Group, the homewares and sporting goods chain. On Friday Briscoe said it was waiting on a trading update before forecasting future earnings growth. Briscoe was up 0.4 percent to $2.84.

Outside the benchmark index, SeaDragon, which this month announced plans for a deeply discounted rights issue, fell 7.7 percent to 1.2 cents after it said it expects annual sales to rise 60 percent in 2016, helping generate positive pretax earnings.

Green Cross Health, formerly known as PharmacyBrands, advanced 4.2 percent to $2.23 after it said it will return $20.3 million to shareholders through a special dividend after reviewing its capital structure.

(BusinessDesk)