NZ shares fall as tight rate outlook sharpens focus on GDP - market close

Shares in Channel Infrastructure fell 3.2% to $1.52 after BP NZ sold its stake in the company. Photo / Tania Whyte

New Zealand shares fell as investors ponder the nation’s tight monetary policy ahead of economic data poised to show whether or not the country is out of recession.

The S&P/NZX 50 index dropped 96.21 points, or 0.8%, to 11,671.19. Across the main board, 84 stocks fell, 47 rose and 53 were unchanged. Turnover was $225.6 million, of which Channel Infrastructure and Infratil accounted for $88.4m.

Companies typically held for their reliable dividends remained under pressure as investors absorbed the hawkish view of the Reserve Bank of Australia in keeping its target cash rate at 4.35% and NZ central bank chief economist Paul Conway’s speech outlining the path to a 2% inflation rate.

Argosy Property fell 1.9% to $1.03, Kiwi Property declined 1.2% to 79.5 cents, Goodman Property slipped 2.1% to $2.075, Precinct Properties NZ decreased 1.3% to $1.135 and Stride Property was down 1.7% at $1.19.

“A lot of parts of the economy are doing it tough,” said Greg Smith, head of retail at Devon Funds Management. “There’s weakness in consumer confidence, manufacturing and services.”

Freightways, often seen as a bellwether for the economy, fell 1.1% to $7.83.

Smith said the big question will be how the Reserve Bank of NZ reacts to other central banks cutting interest rates.

Balance of payments figures released on Wednesday showed a larger annual current account deficit in the March period than expected, due in part to a decline in tourism exports.

Rental RV operator Tourism Holdings fell 2.7% to $1.80, Air NZ declined 1.9% to 52.5 cents with two million shares traded, and Auckland International Airport slipped 1.3% to $7.45.

Fletcher Building dropped 4% to $2.87. The company today said it’s selling half of its Fijian business to local interests for $20m and will take an impairment charge of $15m on the unit.

Dairy companies were also weaker after prices for whole milk powder fell at the latest Global Dairy Trade auction. Synlait Milk dropped 3.3% to 29 cents, a2 Milk slipped 0.3% to $7.20 and Fonterra Shareholders’ Fund units declined 2% to $4.

Import terminal operator Channel Infrastructure fell 3.2% to $1.52 on a volume of 32.6 million after BP NZ sold its stake in the company. The multinational oil company sold 31.6 million shares in a block trade managed by Craigs Investment Partners at $1.46 apiece, a discount to the trading price though still higher than the $1.35 per share price Mobil Oil NZ sold its 53.8 million shares for in December.

Devon’s Smith said there’s still plenty of life in the market despite the soggy share prices, given the Channel block trade, Infratil’s $1 billion placement and the Fortescue block trade in Australia.

Infratil gave up some of yesterday’s gains, falling 2% to $11.08 with 3.7 million shares changing hands today. That’s still above the $10.15 price the shares sold for in this week’s placement to institutional investors.

“It seems like people are taking something off the table – investors have done well there,” Smith said.

Still, Smith said the subdued domestic market appears to be weighing on some merger and acquisition activity given the failures of Rakon and Comvita to get deals over the line.

Rakon slumped 10.7% to 67 cents after saying it wasn’t able to resolve differences with a potential suitor who made a highly conditional non-binding offer at $1.70 a share.

Comvita, meanwhile, fell 3.5% to $1.09, and is trading near its lowest level since late 2009. It ended its negotiations with a suitor last month.

“US stocks have been in a 20-month bull run but we haven’t really seen that in New Zealand,” Smith said. “There’s still a lot of uncertainty over the outlook of the economy.”

Geneva Finance tumbled 23%, or 6 cents, to 20 cents in the biggest decline across the main board. The finance company’s shareholders will next month vote on whether to shift to the USX from the NZX. The stock market operator’s shares were unchanged at $1.05.

Tech companies were among the bright spots today following strong leads from the US, where Nvidia overtook Microsoft as the largest listed company in the US.

Gentrack extended recent gains as it rose 1.6% to $10.15, Eroad advanced 2% to $1.02 and ikeGPS climbed 2.2% to 46 cents. Travel software firm Serko was unchanged at $2.99 while cinema analytics firm Vista Group International declined 1.3% to $2.22.

NZ Wind Farms was unchanged at 13.1 cents after Meridian Energy chief Neal Barclay resigned from the company’s board to avoid any conflicts of interest if Meridian was to partner with the smaller company in future developments. Meridian slipped 0.6% to $6.21.

Seeka rose 1.7% to $2.39 after the kiwifruit orchardist forecast annual profit to be between $15m and $19m in calendar 2024, compared to a pre-tax loss of $21m last year.

Fruit exporters T&G Global fell 2.3% to $1.70 and Scales declined 2% to $3.50.

Among other of the more heavily traded companies, Spark NZ declined 1% to $3.99 with 3.1 million shares changing hands, Tower rose 1.2% to 84.5 cents on a volume of 2.4 million, Port of Tauranga slipped 1.9% to $4.65 with 1.2 million shares traded, and Contact Energy dropped 1.4% to $9.02 on a volume of 1 million.