MARKET CLOSE: NZ shares fall; Chorus, MRP, Tower drop, Diligent jumps
Aug 8 (BusinessDesk) – New Zealand shares fell amid concern Chorus still faces regulatory uncertainty, while
MightyRiverPower and Contact Energy dropped after a new deal was signed with the Bluff smelter allowing the plant to buy
less power. Diligent Board member Services soared after a broker upgrade.
The NZX 50 Index fell 6.922 points, or 0.2 percent, to 4541.382. Within the index, 32 stocks fell and 18 rose, making it
a rare day where no stocks were unchanged. Turnover was $98 million, with some local trade potentially distracted by the
looming Z Energy float of up to $900 million.
Chorus dropped 3.3 percent to $2.93, reversing most of yesterday’s gains when Communications Minister Amy Adams proposed
a more favourable regime for the network company to operate, upgrade its networks and build a fibre infrastructure.
Adams’ proposal will still cut the regulated price Chorus and charge for network access on the copper lines.
“We’ve had a longer-term view that it’s going to be a tough sector,” said Nigel Scott, an adviser at Craigs Investment
Partners. Investors “are not sure the full level of uncertainty has been cleared.”
Telecom, which pays Chorus for access to its networks, rose 1.8 percent to $2.30. Scott said investors are awaiting its
earnings to see what progress it has made in cost cutting initiatives and plans for dividends and its balance sheet
going forward.
“The market is awaiting the AGMs and results for clear indications how companies are performing,” Scott said.
Fletcher Building gained 0.5 percent to $8.41.
Tower dropped 5.6 percent to $1.70, extending its slide since saying this week that it may be required by the regulator
to hold more capital.
MightyRiverPower dropped almost 3 percent to $2.30 and Contact Energy fell 0.9 percent to $5.35 after the government
chipped in $30 million to keep the smelter, Meridian’s biggest customer and New Zealand’s biggest power consumer, open
until at least 2017.
The deal also gives the smelter greater flexibility about how much or little of its contracted load it has to take. It
will now be able to reduce its contracted volume from 572 Megawatts to 400 MW from 2015.
Diligent jumped 9.3 percent to $5.90 after brokerage Craigs Investment Partners upgraded its recommendation to ‘buy’
from ‘hold’, saying a slump in the share price was overdone.
Fonterra Shareholders’ Fund gained 0.9 percent to $7.09 as the dairy giant continued efforts to contain fallout from its
whey protein contamination scare.
Craigs’ Scott said the local market has been underweight units of the fund and some investors had used the dip in the
price this week to add to their holdings.
Turners & Growers was unchanged at $1.61 after the German-controlled fruit marketer announced it almost tripled first-half profit
to $16.6 million as apple export sales gained, particularly in North America. T made the announcement after the close of trading.
Vector slipped 1.1 percent to $2.67. The electricity and gas lines company is likely to beat its guidance in 2013 with a
modest uplift in operating earnings but 2014 results will fall as regulated price cuts bite and it sells less cheap
Kapuni gas, said Craigs analyst Grant Swanepoel, who lifted his recommendation on the stock to buy.
(BusinessDesk)