MARKET CLOSE: Shares mixed, Fonterra falls on GDT, Chorus rises

New Zealand shares were mixed, Fonterra Shareholders Fund fell after dairy prices fell overnight. Spark New Zealand declined as one major broker ranked the stock as 'under-perform,' while Chorus rose.

The NZX 50 Index edged down 1.375 points, or 0.02%, to 5755.787. Within the index, 18 stocks fell, 18 rose and 14 were unchanged. Turnover was $130 million.

Overnight, dairy product prices fell for the fifth consecutive GlobalDairyTrade auction to the lowest level since August 2009, adding to the pressure on the one in four dairy farmers the Reserve Bank says has negative cashflow this season. Investors are weighing the economic outlook for companies against the possibility of lower interest rates. Units of Fonterra Shareholders' Fund, which gives holders access to Fonterra Cooperative Group's dividend stream, extended their decline, down 0.4% to a record low close of $4.85.

"The whole market has gone into a consolidation phase," said Grant Williamson, director at Hamilton Hindin Greene. "The economic picture has probably just deteriorated a little bit, particularly on the back of those dairy prices, so buyers are being cautious."

Government-controlled energy companies, pushed to record levels earlier in the year, fell as investors looked to book profits. Meridian dropped 2.6% to $2.26. Genesis Energy fell 1.3% to $1.89. MightyRiverPower declined 1.2% to $2.935.

Spark NZ, formerly Telecom Corp, dropped 0.4% to $2.81. Chorus, the telecommunications infrastructure operator, advanced 2.6% to $3.165. Both are awaiting a late-year announcement from the Commerce Commission finally determining the regulated price of copper-based broadband services. Chorus owns the copper network and Spark is the largest user of the copper lines. Spark is pushing a customer campaign to force the commission to justify a draft decision that favoured Chorus.

"The Commerce Commission decision on pricing will affect the telcos and the infrastructure companies. "One will be a winner, one side will inevitably be a loser," Williamson said. "With Spark, a large broker has come out with an 'underperform' on the stock, so obviously that's not helping investor confidence in Spark," he said.

Goodman Property Trust was unchanged at $1.14. The property investor, which has teamed up with Singapore government-owned GIC to develop the Auckland Viaduct Quarter, lifted annual earnings 5.4% to $97.9 million as it reaped higher rental revenue while clamping down on costs.

Outside the benchmark index, Cavalier Corp was unchanged at 36c after Colin McKenzie stepped down as managing director and chief executive of the carpet maker ahead of asset writedowns that will result in a full-year loss.

"Cavalier came out with another disappointing announcement, probably not unexpected but its earnings outlook is going to be at the lower end of the range," Williamson said. "A bit of positive news there that they're going to get a little bit more focused on what they're getting good at. The market has taken it pretty much in its stride, so there will be a few bargain hunters in the stock thinking eventually the company has got to turn around."

(BusinessDesk)