NZ shares fall as investors make way for $1b Auckland Airport placement

Auckland Airport has opened a $1 billion placement to institutional investors at a discounted $4.50 a share

New Zealand shares fell as investors freed up cash to take part in the $1 billion placement of new Auckland International Airport shares. Kiwi Property Group, Contact Energy and Fisher & Paykel Healthcare were all off the pace today.

The S&P/NZX 50 Index dropped 171.36 points, or 1.7 per cent, to 9,763.82. Within the index, 36 stocks fell, eight rose, and six were unchanged.

Auckland Airport shares were halted today at $5.04 to allow for a $1 billion placement to institutional investors at a discounted $4.50 a share. And the airport plans to raise another $200 million through a share purchase plan. The fully underwritten offer wasn't first run past cornerstone shareholder Auckland Council, which stands to get heavily diluted if it doesn't participate.

The airport said it needs to shore up its balance sheet as the pandemic causes nations to shut their borders and restrict domestic travel. The capital raising is almost 1 per cent of the NZX's $136.2 billion equity market capitalisation, and is expected to attract international investors looking for cheap infrastructure assets.

Peter McIntyre, an investment adviser at Craigs Investment Partners, said the capital raising was already being felt on the local market as investors sold down other stocks to take part.

"Compared to sentiment offshore, the NZX50 is the only exchange in the red," he said.

"I think the magnitude of the Auckland Airport capital raise has surprised the market and there has been some rotation occur."

The airport is the second company to seek money from investors to shore up its balance sheet after outdoor goods retailer Kathmandu Holdings announced plans to raise $207 million at a steep discount. Kathmandu led the market lower, falling 9.1 percent to 70 cents.

McIntyre said investors were reacting negatively to the prospect that further capital raisings would be coming down the line, depressing share prices further.

"Probably the property companies will be one sector that potentially will have more capital raisings as well."

Kiwi Property fell 7.2 per cent to 83.5 cents, Goodman Property Trust fell 3.2 percent to $2.12 and Argosy Property declined 1.1 per cent to 88.5 cents.

"A number of investors are concerned about tenant renewal and if we go into a prolonged lockdown, what the shape of some businesses that are tenants are going to be in post-covid," McIntyre said.

Vista Group International was down 9 per cent at $1.11

Tourism Holdings decreased 4 per cent to 96 cents and Air New Zealand declined 2.3 percent to 84 cents.

"Inbound travel from outside New Zealand looks like it is closed for 12 months, with a potentially slow recovery in passenger numbers," McIntrye said.

Refining NZ declined 3.5 per cent to 84 cents after it said it would extend its reduced production for another two months in response to weak demand for fuel.

Meridian Energy declined 1.8 per cent to $4.35, Contact Energy fell 3.9 per cent to $5.71, Genesis Energy decreased 3.1 per cent to $2.49 and Mercury NZ slipped 3.1 per cent to $4.04.

Ebos Group fell 4 per cent to $21.60 and F&P Healthcare decreased 3.8 per cent to $29.40. Fletcher Building fell 3.5 per cent to $3.33.

Spark New Zealand gained 0.9 per cent. McIntyre said telecommunications is a sector in hot demand and Spark has become a defensive stock in the current market. Chorus was unchanged at $6.95.

Australia & New Zealand Banking Group posted the day's biggest gain, up 3.7 per cent at $16.98 and Westpac Banking rose 2.9 per cent to $16.60.