New Zealand shares followed Wall Street lower as investors question whether tech and high-growth companies can deliver the earnings growth implied by their valuations. Pacific Edge led the NZX 50 Index lower, while Xero and Diligent Board Member Services paced the decline.
The NZX 50 Index fell 27.892 points, or 0.5 percent, to 5063.539. Within the index, 25 stocks fell, 17 rose and eight were unchanged. Turnover was $100.7 million.
In New York on Friday the tech-heavy Nasdaq Composite Index closed at its lowest level since February after a week of selling as investors continued to question whether sales growth by tech and bio-tech companies could deliver profits. Local tech and high-growth stocks, among the biggest gainers last year, have retreated on concern prices have run up too far and too fast.
Pacific Edge dropped 8.2 percent to a six-month low of $1.01, having fallen to 99 cents in intraday trading. The maker of a non-invasive bladder cancer test has declined 24 percent in the past month. Xero fell 6.5 percent to $29.30, the lowest in almost six months.
Governance software app Diligent slipped 1.9 percent to $4.12.
"It really is selling because the rest of the technology sector around the world is coming off," said Grant Williamson, director at Hamilton Hindin Greene. "It's very difficult to put fundamental value on these types of companies because much of it is really looking into the future and trying to work out what their revenue and earnings might be."
Outside the benchmark index tech stocks weakened. Wynyard Group, the security software firm, dropped 5.1 percent to $2.24. GeoOp, which makes a task management app for small businesses, declined 4.4 percent to $1.29. SLI Systems, the search engine developer, was unchanged at a three month low of $1.90.
Defensive stocks such as infrastructure and property trusts gained as investors sought companies with dependable earnings. Telecom, New Zealand's largest telecommunications provider, rose 1.2 percent to $2.64. DNZ Property Fund, which today announced job cuts to trim costs, advanced 0.5 percent to $1.55, while Argosy Property climbed 0.5 percent to 91.5 cents and Precinct Properties was up 0.5 percent to $1.00.
"When you have a sell off in a more risky sector you do see investors become more conservative and a lot more defensive, so you do see stocks like infrastructure and property quite often benefit from that," Williamson said.
Auckland International Airport rose 0.3 percent to $3.93. The nation's busiest gateway completed the return of $454 million to shareholders via a share cancellation scheme.
Fletcher Building, New Zealand's largest listed company, fell 1.1 percent to $9.59. SkyCity Entertainment Group slipped 1.8 percent to $3.89 and Ryman Healthcare declined 1.1 percent to $8.29.
Goodman Property Trust was unchanged at 96.5 cents after saying it plans to spend $44.4 million developing three new industrial properties.
Coal miner Bathurst Resources was last at 8.2 cents before its stock was halted from trading on the NZX and ASX for the capital raising. A competitive bookbuild is underway as part of a placement that would amount to 10 percent to 12 percent of Bathurst's capital at a discount of 15 percent to 20 percent.
Outside the benchmark index, Hellaby Holdings, the diversified investor, fell 0.7 percent to $2.88 after spending $44 million acquiring New Zealand Trucks South Island and Dasko Marketing NZ.