New Zealand shares fell, paced by Spark New Zealand, as offshore investors sold yield stocks on the prospect the US Federal Reserve may start hiking rates sooner than anticipated, and increasing the returns on offer in the world's biggest economy. Energy stocks fell as New Zealand's general election draws closer.
The NZX 50 Index fell 47.445 points, or 0.9 percent, to 5142.34. Within the index, 30 stocks fell, 12 rose and eight were unchanged. Turnover was $162 million.
The Fed will update the market on monetary policy after its two-day Federal Open Market Committee meeting in Washington, and a run of strong data has raised expectations the central bank might start talking about moving away from running a zero interest rate policy that's been in place since the global financial crisis. Higher US interest rates would encourage some investors to repatriate funds back to the world's biggest economy which have been sitting in yield-bearing assets around the world.
Spark, formerly Telecom Corp, extended its decline from a six-year high, dropping 3.4 percent to $2.945. The telecommunications company is a popular stock with offshore investors because of its liquidity and high dividend yield. Some $19 million of Spark shares changed hands today.
"Spark has been a stock that people have looked at for yield, predominately from offshore, and the locals don't see it as being cheap," said David Price, broker at Forsyth Barr. "The offshore guys want to sell a bit of stock but the buying from the locals will be a bit more selective. A lot of the yield-type stocks have had a rough time."
Energy stocks, which had been gaining in recent times as investors seek higher yields, were sold ahead of uncertainty New Zealand's general election on Saturday. The opposition Green and Labour parties have promised to introduce a state-owned single electricity buyer in a bid to push down retail prices.
Genesis Energy fell 2.1 percent to $1.90. MightyRiverPower declined 1.6 percent to $2.42. Meridian Energy slipped 0.7 percent to $1.37. Lines company Vector dropped 3.4 percent to $2.59.
"People hate uncertainty and electricity stocks would potentially suffer under a non-National government," Price said.
Property stocks, which are bought for their consistent, high dividend yield, also declined. Argosy Property dropped 0.5 percent to $1. Precinct Property New Zealand fell 0.5 percent to $1.105.
Fletcher Building, New Zealand's largest listed company, declined 1.7 percent to $8.78. SkyCity Entertainment Group, the casino operator, dropped 3.2 percent to $3.61.
Heartland New Zealand led the benchmark index lower, dropping 3.9 percent to 98 cents. Freightways, the air freight and logistics company, slid 3.7 percent to $5.01.
Ryman Healthcare was unchanged at $7.68. The country's biggest listed retirement village operator is expanding its board with two new hires, as 15-year veteran director Andrew Clements departs.
Outside the benchmark index, Restaurant Brands New Zealand rose 2.1 percent to $3.42.
The nation's largest fast-food operator increased second quarter revenue 5.8 percent to $108 million as it benefited from increased sales at its largest KFC fried chicken chain and ramped up expansion at its newest Carl's Jr burger chain.