Xero leads drop as shares join global sell-off

Only three local stock prices gain as investors are spooked by geopolitical risks

New Zealand shares fell, led by Xero, A2 Milk Co and Pacific Edge, joining a global sell-off as geopolitical risk spooked investors. Gentrack Group plunged below its offer price after saying it would miss its prospectus forecast for sales and profit barely a month after its $99 million initial public offering.

The NZX 50 index shed 58.06 points, or 1.1 per cent, to a two-week low of 5109.93. Within the index, 43 stocks fell, while only three rose. Turnover was $10 million.

Stocks across Asia followed Wall Street lower, with Japan's Nikkei 225 index down 0.6 per cent in afternoon trading, Australia's S&P/ASX 200 falling 1.3 per cent and Hong Kong's Hang Seng down 0.5 per cent. Overnight the tech-heavy Nasdaq Composite Index plunged 2.1 per cent as conflict between Israel and Palestine escalated, investors fretted over the Ukrainian standoff between Russia and the West and Argentina faced default on its foreign-currency debt.

So-called momentum stocks led the decline. Xero fell 4.4 per cent to $24.30. A2 Milk Company shed 3.1 per cent to 63c. Biotech company Pacific Edge fell 1.3 per cent to 75c. Diligent Board Members Services dropped 1.5 per cent to $4. Outside the benchmark index, Wynyard Group fell 2.4 per cent to $2 and SLI Systems fell 2.9 per cent to $1.34.

"The geopolitical headwinds in Gaza and also Russia and Ukraine, have been looked past for the last couple of weeks, but the Argentinian default on top of that, I think individually it could be brushed aside by the market," said Greg Smith, head of research at Fat Prophets. "But collectively it's resulted in a pullback and risk coming off the table."

Gentrack Group plunged 13 per cent to $2.24, falling below its June $2.40 IPO price for the first time. The airport and utility software company said profit in the 12 months ended September 30 is now expected to be $2.5 million to $2.8 million - as much as 32 per cent below the $3.7 million forecast in a prospectus first published on May 26. Kathmandu Holdings advanced 1.2 per cent to $3.37. Fletcher Building, New Zealand's largest listed company, fell 2.3 per cent to $8.91. Air New Zealand, 3.8 per cent to $1.905, Argosy Property fell 0.5 per cent to $1.