Market close: Eroad leads tech stock hammering

Shares in Eroad fell 6 per cent to 63 cents.

Transport hardware and software company Eroad led the local share market lower as rising bond yields continue to weigh on the outlook for technology stocks.

The S&P/NZX 50 Index fell 33.46 points, or 0.3 per cent, to 10,960.62, extending its decline this year. Turnover was $128.8 million across the main board, with 87 stocks falling and 47 rising out of the 185 traded on the exchange.

Eroad fell 6 per cent to 63 cents leading the benchmark index lower, with 240,000 shares changing hands. The price is still below the 70 cents in the recent $50m capital raising, which was poorly supported and needed the underwriters to make up the shortfall, and well short of the $1.30 takeover offer by Canada’s Constellation Software made earlier this year.

Peter McIntyre, an investment adviser at Craigs Investment Partners, said Eroad had fallen yesterday in Australian trading and there was probably some degree of catch-up in today’s local session, given the yield on US 10-year Treasuries hit 5 per cent, the highest level in 16 years.

“Higher bond yields have certainly impacted technology stocks, particularly those that may carry more risk than the average one,” McIntyre said.

“It’s disappointing on the surface to see that stock trading where it is considering it’s been through a capital raise and obviously had that unsolicited bid as well.”

Among other tech companies to fall, PaySauce declined 4.7 per cent to 18.1 cents, Task Group fell 4.7 per cent to 41 cents, Smartpay Holdings was down 3.6 per cent at $1.36, Serko slipped 3.3 per cent to $4.15, and ikeGPS decreased 3.2 per cent to 60 cents.

Auckland International Airport was the most heavily traded stock with almost 4.1 million shares changing hands. It fell 2 per cent to $7.49.

The airport operator is among those parties making submissions to the Commerce Commission’s consultation on input methodologies in setting appropriate returns on regulated assets, with a final decision slated for December.

McIntyre said that volume looked like institutional investors in there, and with term deposits offering returns close to the pace of inflation many investors will continue to sit on the sidelines.

Synlait Milk was also among those companies to decline today, falling 2.2 per cent to $1.33. The milk processor’s independent chairman Simon Robertson left immediately on Monday, leaving some fund managers questioning whether there’s a split in the boardroom while the company grapples with a looming debt maturity and sale of its cheese businesses.

A2 Milk, which is at loggerheads with Synlait over an exclusive supply agreement, slipped 0.7 per cent to $4.35.

Vista Group International bucked the trend among tech companies, posting the biggest gain on the NZX50 as it rose 3.7 per cent to $1.40. Cooling tensions between Hollywood studios and the actors’ unions have taken the edge off a risk that was hanging over the cinema software company’s head.

Ebos Group rose 1.1 per cent to $34.50 after saying its underlying businesses experienced high single-digit earnings growth in the September quarter, and that it was looking for ways to offset the upcoming loss of the Chemist Warehouse supply deal in Australia.

Meridian Energy was also stronger, up 2.1 per cent at $4.95 with 1.8 million shares traded, while Fisher & Paykel Healthcare advanced 1.8 per cent to $21 and Fonterra Shareholders’ Fund units gained 1.6 per cent to $3.10.

Outside the benchmark index, Metro Performance Glass climbed 5.2 per cent to 14.2 cents after the glass processor appointed Pencarrow Private Equity co-founder Shawn Beck to its board, while NZ Rural Land Co rose 3.7 per cent to 84 cents after saying recent gains in dairy prices boded well for its farmer tenants.

Rural services firm PGG Wrightson rose 3.8 per cent to $3.55.