New Zealand shares fell as the outbreak of coronavirus continued to weigh on tourism-related companies, and as a flatter interest rate outlook sapped the attraction of companies paying reliable dividends.
The S&P/NZX 50 Index fell 23.3 points, or 0.2 per cent, to 11,877.8. Within the index, 23 stocks fell, 17 rose and 10 were unchanged. Turnover was $113.4 million.
Stocks exposed to the tourism sector remained under pressure as the risk of a potential coronavirus epidemic on international travel weighed on global investors.
Air New Zealand fell 0.3 per cent to $2.98 on a bigger volume than normal of 3.6 million shares, Auckland International Airport declined 1 per cent to $8.885 with 692,000 shares changing hands, and Tourism Holdings was down 1.6 per cent at $3 on a volume of 308,000 shares.
Michael McCarthy, chief market strategist at CMC, said it was remarkable the way different markets had reacted to the coronavirus risk. Share markets in China were under pressure, with the Shanghai and Shenzhen indices recording 2-to-4 per cent falls on several occasions this week, while the S&P500 in the US was up 1 per cent.
"If this is going to have an impact, given that it has its roots in China – the second-largest economy in world – it's going to have an impact everywhere. So, clearly investors in different parts of the world are taking different views," he said.
A2 Milk, which counts China as a major market, decreased 0.1 per cent to $16.01.
Oceania Healthcare held steady at $1.31 on a volume of 971,000 shares. The retirement village operator and developer announced underlying earnings from continuing operations were up 17.6 per cent at $24.1m.
Other retirement village stocks also performed well as the Metlifecare takeover bid continued to stoke demand for rival companies.
Arvida Group rose 1.1 per cent to $1.87 on a volume of 164,000, Ryman Healthcare advanced 0.7 per cent to $16.62 on a volume of 252,000, and Metlifecare rose 0.2 per cent to $6.88 on a volume of 1.7 million, below the $7 per share takeover offer.
Electricity utilities have remained in vogue among investors because their reliable dividend payments have been a favoured alternative to bonds and term deposits in a low-interest rate environment. Inflation data today reduced the chance of the Reserve Bank cutting the official cash rate, and reduced the attraction of some yield stocks.
Meridian Energy led the market lower, falling 1.9 per cent to $5.22 on a volume of 820,000 shares, Z Energy fell 1.5 per cent to $4.61 on a volume of 406,000. Contact Energy rose 0.4 per cent to $7.48 on a volume of 697,000 shares and Precinct Properties rose 1.1 per cent to $1.895.
"Positive surprises in inflation that lead to New Zealand investors thinking rates might not be lowers for longer certainly would weigh on those high dividend stocks," McCarthy said.
"However, given the shocks we have had with the drops in revenue related to power supply, the energy sector looks like they are the weak hand in the market. So, when investors want to sell, they still look at the energy sector as a potential area to push on."
New Zealand Refining fell 1.8 per cent to $1.64, extending its decline this week as investors digest skinnier margins.
Vista Group International was the biggest gainer today, rising 2.7 per cent to $3.75 on a volume of just 52,000 shares.
Among stocks that traded on volumes of more than a million, Spark New Zealand fell 0.4 per cent to $4.58, Sky Network Television gained 1.4 per cent to 72 cents and Investore Property held at $1.80.