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New Zealand shares fell, dragged lower by election uncertainty and geopolitical fears, with Auckland Airport dropping to an eight-month low and Trade Me Group falling.
The S&P/NZX50 Index dropped 30.82 points, or 0.4 per cent, to 7,777.4. Within the index, 32 stocks fell, 14 rose and four were unchanged. Turnover was $133 million.
Peter McIntyre, investment adviser at Craigs Investment Partners, said geopolitical turmoil and the upcoming general election were causing some investors to sit on the sidelines, while US markets have been closed overnight due to the Labor Day holiday.
"It's a wary market at the moment - that North Korean tension, people are wondering what Trump's going to do possibly, and then you put on top of that an election that is too close to call," McIntyre said. "The market has got a very cautious feel about it, we started fairly flat today but we've been weaker during the day. We'll get a bit more flavour once that US market finishes tomorrow morning."
Auckland International Airport was the worst performer, down 2.1 per cent to $6.50.
"A lot of analysts, particularly on the institutional side, would say that it is over valued," McIntyre said. "It's still a popular stock for retail investors, but they continue their weakness even though they're carrying a dividend. There's good liquidity running through the stock as well, if investors are wanting to profit-take it's an easy one to do that."
Trade Me Group fell 1.9 per cent to $4.59, while Sky Network Television dropped 0.8 per cent to $2.59. Sky TV's shares hit 18-year intraday lows yesterday, after reports that global internet giant Amazon is making a play for New Zealand's rugby broadcasting rights.
"Trade Me had a reasonable result, but the market is scared of Amazon and the potential it has in the Southern Hemisphere, and how potentially it could take business away. Facebook is also becoming quite a competitor, so there are concerns about their business model five to ten years out, and investors re-aligning their thesis for Trade Me on that basis," McIntyre. "Sky TV has been hammered on the same premise of Amazon - we're really waiting for management to come up with a business plan. It's exceptionally cheap at the moment, I think investors are happy just to get out in the mean time and see what happens there."
Spark New Zealand was the best performer, up 1.2 per cent to $3.915 while Xero rose 1 per cent to $26.50.
NZX gained 0.9 per cent to $1.16. Trading activity rose in August, once again lifted by a strong rise in activity by smaller investors. The number of trades worth less than $50,000 increased 21 per cent to 170,046, accounting for 95 per cent of the total volume.
Outside the benchmark index, Tower gained 0.6 per cent to 90.5 cents. Vero Insurance's appeal against the Commerce Commission's rejection of its planned takeover of Tower will be heard in January next year.
The appeal is one of two major decisions the regulator is preparing for after a heavy year of merger and acquisition activity. In the past year, the commission also rejected merger applications by news publishers Fairfax New Zealand and NZME, and pay-TV operator Sky Network Television and telecommunications group Vodafone New Zealand.
"The Commerce Commission has got a blanket approach at the moment of declining everything, that will be interesting how it eventuates," McIntyre said. "The shares are trading up but there's no real volume running through."