Shares fall as kiwi gains on aussie

Fletcher Building fell 2.8 per cent to $8.27. Photo / Steven McNicholl

New Zealand shares fell yesterday, led by Fletcher Building, Kathmandu and Michael Hill International as the kiwi rose to a five-year high against the Australian dollar, weighing on companies with business across the Tasman.

The NZX 50 fell 22.40 points, or 0.5 per cent, to 4576.8. Within the index, 28 stocks fell, eight rose and 14 were unchanged. Turnover was $104 million.

The NZ dollar extended its gains against its Australian counterpart to the highest since November 2008, recently trading at A87.17c, after Reserve Bank governor Graeme Wheeler said interest rates would need to rise next year as inflation pressures from housing and construction spilled into the broader economy.

Fletcher Building, which gets about 43 per cent of revenue in Australia, fell 2.8 per cent to $8.27. Brokerage CLSA cut Fletcher to "underperform" because of slow progress with the rebuilding of Christchurch and a more moderate Australian housing recovery, the Australian Financial Review reported.

Kathmandu fell 2.6 per cent to $2.68 and Brisbane-based jeweller Michael Hill fell 1.6 per cent to $1.27.

The strong kiwi cross rate "will hurt, there's no doubt about it", said David Price, a broker at Forsyth Barr. In the coming earnings season, those companies with Australian exposure would be showing the effects of "a double whammy of an Australian economy that's struggling" and the currency headwinds.

Fonterra Shareholders' Fund declined 2.8 per cent to $7.27 after the world's largest exporter of dairy products said earnings would miss its forecast by about 7.3 per cent because of the drought in New Zealand and intense competition in Australia.

A2 Corp fell 1.5 per cent to 67c, and Synlait Milk declined 0.7 per cent to $2.78.

Guinness Peat Group climbed 7.8 per cent to 55c and was the biggest gainer on the NZX 50 as 46.5 million shares changed hands.

Livestock Improvement, the dairy genetics and bull semen company whose shares can be traded only by farmers, ended the day up 0.3 per cent to $5.82 after posting a 3 per cent drop in annual profit.

Infratil fell 0.8 per cent to $2.47 after its half-owned Z Energy released its prospectus for a $900 million IPO.

Among the best performers on the exchange this year, Xero slipped 0.2 per cent to $17.90 and Ryman Healthcare fell 0.3 per cent to $7.08, having reached a record the previous day. Ebos Group was unchanged at $10.45, the record high it reached on Wednesday.

Telecom declined 0.4 per cent to $2.345. New Zealand Oil & Gas was unchanged at 83c.