Dividend payers lead NZ market down

SkyCity shares fell 1.3 per cent yesterday to close at $3.77

Meridian Energy, Precinct Properties and Spark pace the drop as investors look for growth in earnings season.

New Zealand shares fell yesterday from a record close paced by Meridian Energy, Precinct Properties New Zealand and Spark New Zealand, as the appetite for regular dividend paying stocks waned. SkyCity Entertainment Group fell, ahead of reporting its earnings.

The NZX 50 Index fell 28.02 points, or 0.5 per cent, to 5769.57. Within the index, 29 stocks fell, 15 rose and six were unchanged. Turnover was $118 million.

The local market has been pushed to record levels as investors hunt for yield-paying investments in a globally low interest rate environment.

As local earnings season gets under way this week, shareholders are looking for growth to justify the gains in yielding stocks' share prices.

Stocks held for their regular dividends, such as property investors and energy generators and retailers, fell. Meridian dropped 1.5 per cent to $1.92. Spark, the country's largest telecommunications provider, declined 1.7 per cent to $3.43. Precinct Properties fell 1.2 per cent to $1.23. Kiwi Property Group slipped 1.5 per cent to $1.32.

"Those stocks which are interest rate sensitive, and have benefited from a reduction in interest rates, have had very strong performances and the market is taking a pause on those stocks at the moment," said Shane Solly, director at Harbour Asset Management.

"There is risk that if some of these yield stocks that people have been chasing come out with a disappointing outlook or guidance, particularly if it involves lower dividends or dividends that are less than expected, then some of them will get repriced real quick."

SkyCity, the casino operator, fell 1.3 per cent to $3.77 and is the first benchmark index stock to kick off financial reporting season, reporting first-half results tomorrow.

Outside the benchmark index, Opus International Consultants rose 0.7 per cent to $1.37. The engineering firm is due to report today and has been on a cost savings mission, restructuring and cutting jobs.

"There's a bit of cautious optimism, certainly in some sectors of the market the companies will need to be at the top end of the range because of expectations," Solly said.

Investors would be looking at the impact currency and commodity price movements have had on companies, as well as the effect Australia's slowing economy has had on transtasman exposed stocks.

Pacific Edge led the benchmark index lower falling 2.6 per cent to 75c. Air New Zealand fell 2.5 per cent to $2.525. Guinness Peat Group dropped 2.2 per cent to 45c.

A2 Milk Co was the best performer on the day; the milk marketing company advanced 8.7 per cent to 50c. Kathmandu Holdings climbed 3.6 per cent to $1.44. Both companies are exposed to the Australian retail sector, which has shown signs of picking up, while a falling New Zealand dollar against the Australian currency will also help earnings, Solly said.

NZX fell 0.8 per cent to $1.18. The stock market operator has reached a settlement with the Inland Revenue Department after being audited. Its annual results, due next week, will include a provision of $1.2 million to account for the tax and estimated use of money interest payable related to the settlement.