MARKET CLOSE: NZ shares fall, Xero drops 8% on US CEO departure
By Suze Metherell
Sept. 12 (BusinessDesk) - New Zealand shares fell from a record led by Xero, after its North American chief executive
left after only half a year with the company. Meridian Energy fell from a record as political uncertainty ahead of next
week's general election weighed on investors.
The NZX 50 Index fell 28.259 points, or 0.7 percent, to 5223.965. Within the index, 24 stocks fell, 12 rose and 14 were
unchanged. Turnover was $119 million.
Xero dropped 8.1 percent to $21.10, after the cloud-based accounting software company said Peter Karpas, its North
America chief executive, was leaving the company having only started in the role in late Feburary. The Wellington-based
company wants a million customers, and is targeting growth in the US market where it sees the potential to take market
share of an estimate 29 million small to medium sized business owners.
Much of "the fall is due to Xero," said Bryon Burke, head of equities at Craigs Investment Partners. "It's a genuine
surprise and not a lot of clarity or reasoning and the market doesn't like that. There was a hint of uncertainty on how
they were going in the US and then this happens - it increases uncertainty."
Electoral uncertainty ahead of the Sept. 20 general election has caused nervousness in the market, particularly for
offshore investors because of the unpredictable nature of New Zealand's MMP voting system, Burke said. Power companies
have been particularly volatile, as the sector would face increased regulation if there was a change in government.
Meridian fell 0.7 percent to $1.40, having closed at a record yesterday. Vector, the Auckland-based lines company, fell
0.8 percent to $2.60. MightyRiverPower slipped 0.2 percent to $2.44. Genesis Energy increased 0.3 percent to $1.93.
"It's always a long lead into these general elections and if you're a professional fund manager you'd almost be held
accountable if you started taking big bets now ahead of a general election," Burke said.
Spark, formerly Telecom Corp, fell 0.3 percent to $3.01. Fletcher Building, New Zealand's largest listed company,
declined 1.9 percent to $8.97.
Fisher & Paykel Healthcare fell from a record, down 0.2 percent to $5.25. A falling kiwi dollar means the company, which exports
98 percent of its breathing masks and respirators, may post higher earnings than forecast in the current financial year
as it benefits from the decline, according to analysts who follow the stock.
Warehouse Group was unchanged at $3.09. New Zealand's largest listed retailer posted an 18 percent drop in annual profit
to $62 million but said it expects earnings to rise this financial year as it benefits from investments in refurbishing
its stores and adding new businesses.
Outside the benchmark index, Rakon, which makes crystal oscillators used in navigation devices, jumped 12 percent to 32
cents. The company told shareholders at its annual general meeting it is "confident" it will meet its previous forecast
for underlying earnings before interest, tax, depreciation and amortisation of between $10 million to $15 million in the
2015 year, compared with an underlying Ebitda loss of $7.5 million in 2014.
(BusinessDesk)