MARKET CLOSE: Shares fall; Spark, MRP, Meridian drop

New Zealand shares fell, paced by Meridian Energy as traders sold the stock ahead of its second installment date coming due. Spark New Zealand and MightyRiverPower fell as investors looked to book recent gains

The NZX 50 Index fell 6.759 points, or 0.1 percent, to 5817.518. Within the index, 25 stocks fell, 15 rose and 10 were unchanged. Turnover was $141 million.

Meridian declined 1.8 percent to $1.89, with about $38 million worth of its shares changing hands. The partially privatised energy company listed on the bourse in October 2013, with the shares offered in installment 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 feedback we're getting back from in the market is it is offshore selling, and it's very large volume in Meridian, ahead of the installment repayment," said Matthew Goodson, managing director of Salt Funds Management. "It feels more like larger, international investors and there's some suggestion that in some index-type and dividend yield-type funds the stock already has a full weight, based on the paid up installment amount, so if they then go and pay the installment suddenly they become overweight. So there is some suggestion of a degree of forced selling ahead of the installment receipts."

The benchmark index fell to its lowest level since February, as investors looked to book profits from recent gains. Spark, formerly Telecom Corp, fell 1.7 percent to $2.85. MRP, the government-controlled energy company, declined 0.2 percent to $2.995. Genesis Energy, the power retailer and generator, dropped 0.7 percent to $2.23.

"Certainly the last few day's we've started to run into just a little bit of a wall, but you look at the areas of weakness, Meridian, MightyRiver, Spark, the largest and most obvious, they had earlier been bid up very, very aggressively, so perhaps it's just a retreat to where those stocks were a few months ago," Goodson said. "That would account for the great bulk of the index hitting a hiatus at least for now. Valuations are stretched, there's no two ways about it."

Air New Zealand rose 1.1 percent to $2.79. The national carrier has benefited from a drop in global oil prices, with plane fuel being a significant input costs, Goodson said.

Coats Group led the benchmark index lower, dropping 2.9 percent to 50.5 cents. Ron Brierley has resigned from the board of the company that grew out of his investment vehicle Guinness Peat Group, ending a 25-year tenure. GPG sold down its portfolio of investments, leaving just the Coats thread making business, and renamed itself to reflect the change in business.

(BusinessDesk)