Milk firms, Fletcher drag sharemarket down

Synlait Milk fell 6.2 per cent to $7.70.

New Zealand shares fell, pulled lower by A2 Milk Co and Synlait, with construction stocks Metro Performance Glass and Fletcher Building also taking a haircut.

The S&P/NZX 50 Index dropped 92.53 points, or 1.1 per cent, to 8,053.81. Within the index, 26 stocks fell, 14 rose and 10 were unchanged. Turnover was $218 million.

A2 Milk Co dragged the index lower, down 8.4 per cent to $7.94, though it dropped as low as $7.45 during the day. The stock has been on a tear this year, up 307 per cent.

"Clearly it has pulled back very, very hard, but really it's just back to where it was in mid-October," said Matt Goodson, managing director at Salt Funds Management.

"Such has been the speed and remorseless nature of the ascent that it's a very sharp move down today. The only real news out there is a broker in Australia may have downgraded from a positive to a neutral view, but that should be neither here nor there really. There's no fundamental reason we've seen as yet."

The sharp fall earned the stock a price inquiry from market operator NZX yesterday. A2 confirmed it continues to comply with its continuous disclosure obligations.

A2's supplier Synlait Milk fell 6.2 per cent. It too has gained strongly this year, up 164 per cent.

"The Synlait price rise has been a bit puzzling, as a contract manufacturer it's hard to get returns much above what your cost of capital is," Goodson said.

"Maybe there's an option for them at some point to go their own route with their own products, but I think it has been a thematic trade for offshore investors, there's a lot of momentum-type investors."

Metro Performance Glass dropped 5.1 per cent to 94c and Fletcher Building fell 3.7 per cent to $7.09.

Goodson said there were fears about the outlook for the general New Zealand construction sector.

ASX-listed company CSR, which owns Viridian Glass in New Zealand, made some fairly cautious comments about their outlook for New Zealand in their half-year results yesterday, and that could be spilling into Fletcher and Metro Glass, he said.

Mercury New Zealand was the best performer, up 2.1 per cent to $3.36. SkyCity Entertainment Group rose 1.8 per cent to $3.96 and Infratil gained 1.4 per cent to $3.26.

Outside the benchmark index, Methven gained 2 per cent to $1.02. The shower and tapware designer affirmed its expectation for earnings growth on a constant currency basis in 2018 but said first-half profit won't rise due to planned investment.

Auckland-based Methven was projecting net profit on a constant currency basis to be 10 per cent higher than the $5.8m it posted in 2017, a period it described as "very disappointing".

Evolve Education was unchanged at 75c. It has appointed interim chief executive Mark Finlay to the top role, effective immediately. Finlay is a former managing director of the Lollipops Educare Group.