MARKET CLOSE: NZ stocks fall on earnings, election uncertainty; Contact, Meridian drop
By Suze Metherell
July 16 (BusinessDesk) - New Zealand stocks edged lower as uncertainty around stock valuations ahead of reporting season
and the outcome of September's general election weighed on investors. Contact Energy, Meridian Energy and Vector fell.
Port of Tauranga gained on a deal with shipping giant Maersk.
The NZX 50 Index fell 1.153 points, or 0.02 percent, to 5114.243. Within the index, 22 stocks fell, 18 rose and 10 were
unchanged. Turnover was $119.3 million.
Investors are mulling the 8 percent gain the benchmark index has clocked up this year, as they wait for companies to
report earnings next month to qualify the high valuations of stocks. The lead up to the election has traders weighing
the likelihood of the incumbent National-led government returning for a third term. Opposition parties have promised to
restructure New Zealand's energy market, creating a central buying agency to push down retail energy prices which has
weighed on the government's partial privatisation of the power companies.
Energy stocks were mixed. Contact fell 1.8 percent to $5.35. Meridian declined 0.8 percent to $1.25. MightyRiverPower
was unchanged at $2.265 and Genesis Energy, the last of the government's partially privatisated power companies to list,
rose 0.6 percent to $1.81. TrustPower rose 2.1 percent to $7.29. Vector, the Auckland lines company, slipped 0.8 percent
to $2.52.
"Investors are really looking ahead to reporting season but almost the dark cloud of uncertainty behind it, is what is
going to happen in September at the election?" said James Smalley, director at Hamilton Hindin Greene. "We do have the
uncertainty of the election coming up in September that will perhaps overshadow the entire reporting season,
particularly energy stocks which are the most directly affected."
Port of Tauranga rose 2.7 percent to $15.50. The country's busiest exporter announced global shipping line Maersk will
rotates its Southern Star service through the port, adding 70,000 containers to cross the wharves every year.
"Pretty good announcement from Port of Tauranga, that adds 70,000 containers a year, I think they do about 800,000 so
its about an increase of just under 10 percent," Smalley said.
Units in the Fonterra Shareholders' Fund, which give investors access to Fonterra Cooperative Group's dividends, rose
0.5 to $5.88, and made up about a tenth of the day's turnover. Dairy prices fell to their lowest level since December
2012, in the 10th drop out of the last 11 fortnightly auctions on the GlobalDairyTrade platform, leaving economists to
speculate the world's largest dairy exporter will cut its 2015 payout to farmers for a second time this year.
"If milk powder falls but the processed product doesn't fall as much, it's actually good for the fund owners because of
the way the pricing is done," Smalley said. "I think they're starting to work out low milk powder prices are good for
the fund."
Telecom Corp, the country's largest telecommunications provider, rose 1.3 percent to $2.765. Fletcher Building, New
Zealand's largest listed company, increased 0.1 percent to $8.88.
OceanaGold led the NZX 50 lower dropping 5 percent to $3.41.
Outside the benchmark index, Kirkcaldie & Stains, the Wellington-based department store, rose 6.1 percent to $2.25. After the close of trading the company
announced the separate sales of two buildings that make up its Wellington Harbour City Centre property have been
consolidated into one to an unnamed buyer.
(BusinessDesk)