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NZ shares mixed as Bellamy's stoush weighs on A2 Milk

Blue chip yield stocks are attracting New Year buyers.

Sophie Boot
Thu, 05 Jan 2017

New Zealand shares were mixed in holiday trading with yield stocks such as Spark New Zealand and Chorus attracting buyers, while A2 Milk Co was dragged lower by a looming boardroom stoush at ASX-listed rival Bellamy's Australia. 

The S&P/NZX 50 Index edged up 1.3 points, or 0.0%, to 6975.6. Within the index, 24 stocks fell, 18 rose and eight were unchanged. Turnover was $85.7 million. 

"It's just really slow holiday trading at the moment; yesterday we saw some quite good buying in some of the blue chips but they've probably weakened off a bit today," said Peter McIntyre, investment adviser at Craigs Investment Partners.

"We've seen a bit of reversal in interest rates, we've seen swap rates give back some of the gains they made toward the later part of 2016, and we've seen some interest rate sensitive stocks go higher on the back of that – namely Spark, Chorus, Contact, Mercury have been the main ones today."

Spark rose 2.9% to $3.60, Mercury New Zealand gained 2% to $5.26, Chorus rose 1.7% to $4.105 and Contact Energy gained 1.5% to $4.74.

Retirement village operator Arvida Group, which joined the benchmark index on December 16, was the best performer, up 3.1% to $1.34. 

Scales Corp was the worst performer, down 2.9%, or 10c, to $3.37, after giving up rights to an 8c interim dividend. 

A2 Milk Co fell 1.4% to $2.09. The share price began dropping in December after Australian competitor Bellamy's was placed in a trading halt, which has been extended until January 13. 

The shares began recovering when A2 gave an upbeat pre-Christmas market update but resumed their downward track yesterday after news that Singapore-based Black Prince Private Foundation, which holds 14.5% of Bellamy's, has requisitioned an extraordinary general meeting of Bellamy’s shareholders to remove four independent directors and replace them with four of its nominees.

"That adds another dimension to the existing news flow from Bellamy's which is yet to come out in fullness," Mr McIntyre says.

"Until there's further news flow, I think a lot of investors may want to de-risk themselves from that sector or industry. Their recent share price weakness is a bit of an overreaction really – there's a lot of other stuff happening in Bellamy's that A2's not a party to. I suspect while this trading halt's in play, it's going to drift a bit."

Fonterra dips
Fonterra Shareholders Fund dipped 0.3% to $6.03. Dairy product prices fell at the GlobalDairyTrade auction this week, sliding for a second consecutive auction, as whole milk powder prices unexpectedly sank amid increased volume on offer. 

"Obviously the weaker GlobalDairyTrade is actually beneficial to the Fonterra units as one of their major input costs, the price of milk, holding steady benefits the value-add portion of their business," Mr McIntyre says.

"It's another stock that's had a pretty impressive six months, up over 11% in that time."

NZX fell 2.9% to $1.02, Port of Tauranga declined 2.3% to $3.86, and Fletcher Building dropped 1.9% to $10.60.

Outside the benchmark index, Hellaby Holdings was unchanged at $3.52. ASX-listed auto-parts company Bapcor has built a 48.7% stake in Hellaby, creeping closer to winning control of its target with its $3.60 offer.

IkeGPS was unchanged at 39c. Hong Kong investor Scobie Ward, who co-founded hedge fund Ward Ferry Management, has emerged as a substantial shareholder in the laser measurement device maker.


Sophie Boot
Thu, 05 Jan 2017
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NZ shares mixed as Bellamy's stoush weighs on A2 Milk