NZ shares fall as A2 hits 7-month low

A2 led the market lower, down 3.1 per cent at $13.28. Photo / File

New Zealand shares fell, as a seven-month low for A2 Milk outweighed the revival in appetite among investors for high-yielding stocks such as Meridian Energy and Chorus.

The S&P/NZX 50 Index fell 14.62 points, or 0.1 per cent, to 10,858.71. Within the index, 21 stocks fell, 26 rose and three were unchanged. Turnover was $102.1 million with four stocks trading on volumes of more than a million shares.

A2 led the market lower, down 3.1 per cent at $13.28 on a volume of 608,000 shares, less than its 90-day average of 822,000. The milk marketing firm has been on the back foot since China Mengniu Dairy Co announced a A$1.5 billion ($1.6b) takeover bid for Bellamy's Australia, raising the spectre of a tougher competitor for A2.

"I think there are still some questions being asked around the Chinese takeover and how that is going to affect A2 in the key Chinese markets," said Greg Smith, head of research at Fat Prophets.

Sky Network Television gave up some of yesterday's gain in relatively busy trading, down 0.9 per cent at $1.15, with 1.8 million shares changing hands. The pay-TV operator rose yesterday amid a torrent of news about Spark New Zealand's live-streaming issues over the weekend.

Spark was the most traded stock on a volume of 3.5 million shares, compared to its 90-day average of 3.3 million. It rose 1.4 per cent to $4.49, continuing to defy bad publicity over its rugby world cup coverage at the weekend. The telco said its streaming service performed well for Monday night's matches.

"The stock has been knocked around," said Chris Timms, an investment adviser at Craigs Investment Partners, adding that its strength was interesting given the stock recently paid a dividend.

Timms said dividend payers were key to investors at present. Meridian posted the day's biggest gain, up 2.1 per cent at $5.25 on a volume of 973,000 shares.

"People are looking at these stocks as they are getting close to dividend dates and buying in anticipation of that," he said.

Chorus rose 1.5 per cent to $5.15, having shed rights to its dividend yesterday.

Investors will be looking ahead to tomorrow's Reserve Bank announcement on the official cash rate, Timms added. While there is not expected to be a change, the commentary will be important, he said. US manufacturing data will give an indication of how global markets are faring, but elsewhere global markets were having little impact, he said.

Summerset Group rose 1.3 per cent to $6.47 after the retirement village operator said it's proceeding with its Australian expansion plans with the purchase of land in Melbourne.

Timms said that the market received the news well after Summerset had been signalling its expansion for some time. "My reading of that site is that it's pretty attractive."

Ryman Healthcare, which has already has villages in Australia, fell 0.5 per cent to $13. Metlifecare dropped 2 per cent to $4.37, and Arvida Group rose 0.7 per cent to $1.45.

Air New Zealand was down 0.2 per cent at $2.68 after the national carrier said it has signed contracts for its multi-billion-dollar purchase of eight Dreamliner 787-10 aircraft. The deal needs a simple majority at tomorrow's annual meeting, although the Crown has indicated it will vote its 51.9 per cent in favour.

Z Energy increased 0.2 per cent to $5.64 on a volume of 1.2 million shares. Chief financial officer Lindis Jones told the Commerce Commission's conference on the fuel market that heightened competition has lowered the company's return on capital employed to 8.5 per cent this year, and it expects that to fall to 7 per cent next year.

Outside the benchmark index, Tower fell 5.8 per cent to 72.5 cents. The insurer today said it plans to raise $47.2m at 56 cents share to fund a $13m acquisition of Youi NZ's 34,000 policies, and to strengthen its balance sheet.

Comvita rose 0.9 per cent to $3.31 after telling NZX Regulation it complied with disclosure rules. The honey products maker got a 'please explain' note from the stock market supervisor after its price jumped 21 per cent in two trading sessions.

Serko increased 0.5 per cent to $4.06 after the travel app developer said it wasn't affected by the Thomas Cook liquidation and that it has no commercial relationship or financial exposure to the global travel group.