NZ stocks end flat amid Fletcher-SkyCity legal woes - Market close

Shares in SkyCity gained initially after the company filed proceedings against Fletcher Building, which partly relate to a fire that set back construction of the NZ Convention Centre in 2019. Photo / NZME

The Fletcher Building-SkyCity legal imbroglio reared its head again, making for a mixed day’s trading on a market already overshadowed by falls on major markets.

The S&P/NZX50 Index ended 13.66 points or 0.11% down at 12,563.48, with 30.6 million shares, worth $118.4m, trading.

There were 71 gainers and 67 decliners on the main board.

In the US, Wall Street’s main indices were lower after another sharp fall in Elon Musk’s Tesla.

SkyCity gave notice that it would file legal proceedings against Fletcher Building for losses incurred from ongoing delays in the completion of the NZ International Convention Centre (NZICC), which caught fire in 2019.

In response, Fletcher said net costs to complete NZICC had been re-assessed, and that it will record a further provision of $12–15m.

Hamilton Hindin Greene investment adviser Jeremy Sullivan said it was a “nothing to see here” response from Fletcher.

“It’s going to be a drawn-out legal process, which is expensive and uncertain,” he said.

“SkyCity has potentially got more to gain out of it than Fletcher, but it’s the last thing Fletcher needs right now, especially after everything that’s happened in WA.”

Fletcher last year settled a legal dispute involving its unit Iplex Pipelines, which may involve it setting aside $A155 million ($166m) to address plumbing failures in Western Australia.

“SkyCity appears to be escalating legal pressure after years of cost and reputational burden, while Fletcher is balancing delivery with containment of legacy risk,” Sullivan said.

“Investors in both firms should expect prolonged legal proceedings, though operational milestones in 2025–2026 may help shift the market’s focus back to post-completion recovery and earnings delivery," he said.

Fletcher closed down 8c or 2.5% at $3.07 while Sky City dropped 1c to 94c.

Out of favour retirement village firm Ryman Healthcare gained some ground, ending at $2.27, up 8c or 4.3%.

“We’ve seen a nice bounce in Ryman today, and utilities are up as well, so with the prospect of lower interest rates the yield-sensitive stocks are doing all right,” Sullivan said

Fisher & Paykel Healthcare - the market’s biggest stock - was influenced by weakness on Wall Street, ending 57c or 1.5% down at $36.50.

Tesla dropping 14% once again highlighted the general state of uncertainty on the world’s biggest stock market.

“We do tend to follow in their general direction and certainly our largest listed stock Fisher & Paykel Healthcare has done just that.”

Sullivan said real estate stocks were coming back into vogue.

“The disconnect between their share prices and NTA looks attractive for investors when looking at their fundamentals,” he said.

“But there is a local theme starting to play out, which is a recovery and in our economy, thanks to lower interest rates, that helps on two fronts and primarily through the interest rates in the stocks of the gentailers and listed property stocks.”

The Warehouse Group (down 2c at 94c) is to be removed from the S&P/NZX 50 Index and the S&P/NZX 50 Portfolio Index as part of a quarterly rebalancing.

Briscoes Group (up 7c at $4.92) will take its place. The change will happen prior to the market opening on June 23.

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.