Jitters see Carters float shelved

Concern about China's slowing economy, weak commodity prices and uncertainty surrounding the outlook for United States interest rates are keeping markets on edge. Photo / Lynda Feringa

Plans for a sharemarket float of the Carters building supplies chain have been shelved amid ongoing market volatility that saw stocks tumble on exchanges from New Zealand to Japan yesterday.

Concern about China's slowing economy, weak commodity prices and uncertainty surrounding the outlook for United States interest rates are keeping markets on edge.

Data released this week showed Chinese industrial profit fell 8.8 per cent year-on-year in August, sparking a Wall St sell-off that prompted an almost 2 per cent fall in the Dow Jones Industrial Average on Monday.

Markets across Asia followed suit yesterday.

The Shanghai Composite Index had fallen 1.8 per cent by 5.30pm, taking its losses since June 12 to 41 per cent, while Japan's Nikkei had plunged 4 per cent to its lowest level since February.

New Zealand's S&P/NZX 50 fell 86.7 points, or 1.5 per cent, to close at 5612.43, while Australia's S&P/ASX 200 finished the day 195.1 points, or 3.82 per cent, lower at 4918.4, wiping out about A$60 billion in market value.

The New Zealand dollar also dipped and was trading at US63.06c at 5pm from US63.32c at 8.30am.

London-listed commodity trader Glencore was one of the biggest victims of the latest share rout. Its shares plunged 29 per cent on Monday, wiping out more than US$5 billion in market value, over fears the company was not doing enough to reduce debt to withstand a prolonged slump in metals prices.

Carters' owner, Auckland-based Carter Holt Harvey, said that while the 50-store retail chain was performing strongly, equity market uncertainty had led the company to "review the merits of a listing at this time".

The company, part of Kiwi billionaire Graeme Hart's Rank Group empire, did not indicate how long the IPO plans would be deferred for.

The shelving of Carters' IPO came as little surprise to local market players.

"We are seeing increased volatility in markets so it's not unreasonable for companies looking to list or raise equity to pull back for now," said Harbour Asset Management portfolio manager Shane Solly. "We are seeing question marks about global growth and interest rates and that's slowing investor enthusiasm down."

Carter Holt was initially planning to float its entire business, which also includes wood-processing businesses on both sides of Tasman.

The company first put its IPO plans on hold in June, citing "forecasting challenges", before announcing last month that just the Carters business would be floated.

"It doesn't surprise me that they are reconsidering bringing it to market," Nikko Asset Management senior portfolio manager James Lindsay said.

"You want relatively buoyant markets to get the right price when selling assets."

Only one NZX main board IPO - freight and logistics operator Fliway Group - has taken place so far this year, compared with 12 in 2014.

Financial risk insurer CBL Corporation will float next month, while chicken producer Tegel is said to be forging ahead with its listing plans.

Despite the unsettled market environment, Lindsay said investors still had an appetite for fairly priced offers.

John Carey, a fund manager at Pioneer Investment Management in Boston, told Bloomberg TV that he expected the market turbulence to continue. "In the near term, one needs to be careful," he said.

"The world economy is soft in places and there are risks out there."