New Zealand shares fell on the last day of the month as investors continued to bank profits from outperforming stocks and as large fund managers tweaked their portfolios in preparation for May.
The S&P/NZX 50 Index fell 134.12 points, or 1.3 per cent, to 10,532.07. Within the index, 20 stocks declined, 23 rose, and seven were unchanged. Turnover was $248.3 million.
Blue chip companies including Meridian Energy, Spark New Zealand and Ryman Healthcare led the market lower as investors took the end of month as an opportunity to "lock in some profits" and review their portfolio, said Sam Trethewey, a portfolio manager at Milford Asset Management.
"We've seen some profit-taking across several of the large cap names following a strong month, where investors have been willing to look through some of the shorter-term headwinds from Covid and focus on the medium-term value," he said.
The NZX50 is up 7.9 across the month, rallying as investors grew increasingly optimistic that the outbreak has plateaued. The number of new virus cases has fallen steadily since Easter, with just three new local cases reported today.
Liz Kendall, senior economist at ANZ, noted that eliminating the virus will give New Zealand a medium-term economic advantage over those countries facing a second wave of the outbreak. However, she warned that economic damage had already been done.
"We are more cautious about the outlook than equity markets are currently pricing," she wrote in a note. "In time, we expect that firms' difficulties will become clearer and this will see a repricing of risk in markets."
Business confidence plunged to unprecedented lows in April, with half the firms surveyed expecting to cut staff.
Central bank stimulus had provided support to equity markets and investors were moving to cash in on the recovery, Trethewey said.
Meridian led the market lower, falling 5.5 per cent to $4.49 as investors took advantage of the stock's strong recovery. Even after today's decline the share price is up 11.1 per cent across the month.
Spark fell 3.9 per cent to $4.44, Ryman was down 3.1 per cent at $12.11, Fisher & Paykel Healthcare declined 2.4 per cent to $27.39 and A2 Milk Co decreased 1.7 per cent to $19.63.
Investore Property fell when trading resumed this morning following the completion of its $85m placement at $1.65 a share. An additional $15m will be available to existing shareholders at a further discount. The shares fell 3.4 per cent to $1.71.
Trethewey said the capital raising had driven some weakness in other property stocks over the past two days, as they were sold off to redirect funds into the Investore offer.
Some continued this decline, with Goodman Property Trust down 2.2 per cent at $2.255 and Property For Industry falling 0.5 per cent to $2.17. Others held steady: Kiwi Property Group at 96.5 cents, Argosy Property at $1.06 and Precinct Properties at $1.59.
Fletcher Building rose 0.3 per cent to $3.70. An analyst note by Craigs Investment Partners said the impact of the coronavirus crisis on Fletcher won't be as severe as it was during the global financial crisis. The analysts cut their valuation of the stock to $4.85, estimating a 13 per cent fall in earnings.
Australia & New Zealand Banking Group rose 1.8 per cent to $17.92 after reporting a 51 per cent drop in first-half profit, due largely to a A$1.03 billion ($1.09b) provisioning charge for Covid-related bad debt. However, investors took confidence following a successful capital raising from National Australia Bank.
"The capital position the banks are now in means the market has got more comfortable with these names. They were sold heavily through the bulk of March and haven't rallied materially yet compared to the rest of the market," Trethewey said.
Westpac Banking Corp also rose 2.8 per cent to $17.20.
Stock market operator NZX rose 1.6 per cent to $1.28 after it reported an 18 per cent increase in first-quarter revenue.
Auckland International Airport rose 1.7 per cent to $6.09 after saying its $200m share purchase plan was oversubscribed, receiving about $489m of applications. The airport operator raised $1.2b through the plan and a placement at $4.66 a share.
SkyCity Entertainment Group posted the day's biggest gain, up 6.8 per cent at $2.66.