NZ shares fall paced by Fletcher, Sky TV

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New Zealand shares fell paced by Fletcher Building and Sky Network Television as offshore investors reconsider stock valuations as they prepare for next year. Spark New Zealand climbed after it flagged plans to hike retail prices.

The NZX 50 Index fell 19.358 points, or 0.3 percent, to 5523.575. Within the index, 33 stocks fell, 12 rose and five were unchanged. Turnover was $189 million.

Blue chip stocks with a large offshore investor base fell as traders weighed up the outlook for the New Zealand economy and companies next year. Fletcher, the building supplies and construction company, dropped 2 percent to $8.15. Sky TV, the country's dominant pay TV provider, declined 2.3 percent to $6.03. Chorus, the telecommunications network operator, fell 0.9 percent to $2.665. SkyCity Entertainment Group, the casino operator, slipped 0.8 percent to $3.97.

"Our market is trading on really high multiples and when you come to the end of year people start to question what next year might look like," said Rickey Ward, NZ equity manager at JB Were New Zealand. "Most people would sit here looking through the wishing well, so to speak, and say it's really hard to see how we get the same returns we've enjoyed over the last few years from the New Zealand market, and perhaps it's time to take profit and look to reinvest elsewhere."

"It appears to be very much internationally owned stocks, rather than domestically owned stocks, by that the likes of Chrous, Fletcher Building, Sky City and Sky TV, they're all internationally owned. It would appear there's some asset allocation from offshore," Ward said.

Spark New Zealand rose 3.6 percent to $3.14 after the telecommunications provider, formerly Telecom Corp, said it will hike retail prices for its home phone and broadband plans from February, blaming the smaller reduction in regulated wholesale prices on Chorus's copper network.

"It depends whether they can retain their customers," Ward said. "People expected Spark to react this way, they made very clear statements that they would reconsider their pricing structure in light of new news. Spark is not driven by fundamental value, it's driven by income and this is further confirmation the company will do as much as they can to make sure you get the dividend."

Units in Fonterra Shareholders' Fund rose 0.2 percent to $6.18. Dairy exporter Fonterra Cooperative Group slashed its forecast farmgate milk price for the 2014/2015 season by 60 cents per kilogram of milk solids to $4.70/kgMS but left the dividend range unchanged at 25-35 cents per share. The units give holders access to Fonterra's dividend stream.

"It's biggest input is the cost that they pay farmers for their milk," Ward said. "The fact it looks like they're going to pay less for it should theoretically help the bottom line, and what helps the bottom line means they get to pay a higher dividend."

DNZ Property Fund was unchanged at $1.88. The listed property investor sold an industrial site in Hamilton for $12.4 million, with the funds going into its Westgate Mall project.

Heartland New Zealand fell 0.9 percent to $1.16. The bank, which formed after the merger of Canterbury and Southern Cross building societies and Marac Finance, has appointed Deborah Taylor to its board, effective from today.

Outside the benchmark index, Hallenstein Glasson gained 1.6 percent to $3.15 after the clothing chain said sales are tracking above last year after four months of trading and margins have improved, though the Christmas sales period remains critical, according to chairman Warren Bell.

Turners & Growers was unchanged at $1.90 after the fruit marketer majority owned by Germany's BayWa bought two New Zealand tomato farms for $25.8 million to bolster its supply.

On the New Zealand Alternative Index, Chatham Rock Phosphate, which wants to mine phosphate from the New Zealand seabed, jumped 29 percent to 22 cents. The miner was awarded a taxpayer funded research and development three-year "Growth Grants", administered by Callaghan Innovation, which allows recipients to claim back 20 percent of eligible R&D spending, capped at $5 million a year, implying annual R&D spending of up to $25 million.