Fletcher Building leads NZ shares lower

Fletcher Building shares fell 11 per cent, or 62 cents, to $4.93. Photo / File

New Zealand shares fell as Fletcher Building slumped to a nine-year low after the country's biggest listed construction firm warned of weaker profit, and as growth stocks such as Pushpay Holdings followed Wall Street lower.

The S&P/NZX 50 index dropped 72.63 points, or 0.8 per cent, to a three-week low of 8,720.30. Within the index, 21 stocks fell, 20 gained, and nine were unchanged. Turnover was $180.8 million, of which A2 Milk accounted for $41.9m and Fletcher made up $24.2m.

Fletcher Building was the day's biggest decliner after it announced first-half operating earnings will be 10 per cent lower than last year. The shares fell 11 per cent, or 62 cents, to $4.93, its lowest level since the depths of the GFC in 2009. It was the most traded stock with 4.8 million shares changing hands.

But Nigel Scott, an investment adviser at Craigs Investment Partners, says Fletcher isn't alone.

"If you look at Boral, James Hardie, Lend Lease, Adelaide Brighton, their charts look remarkably similar," Scott said, adding that story is about the weak Australian housing market.

Outside the benchmark index, Metro Performance Glass dropped 3.1 per cent to a new record low of 62 cents. The glass products supplier has been struggling with an Australian acquisition during the past two years. Yesterday its shares sank 24 per cent on news of a new entrant in the domestic market.

Building products firm Steel & Tube Holdings fell 3.1 per cent to $1.24. Both the steel products maker and the Commerce Commission today said they will appeal a record $1.89m fine imposed on the company for misrepresenting steel mesh products it sold.

Scott said the New Zealand dollar's recent strength, rising from below 65 US cents last month to more than 68 cents, has hurt exporters such as Fisher & Paykel Healthcare, whose shares fell 0.5 per cent to $12.90.

Fisher & Paykel has been one of a number of stocks that trade at very high multiples to have suffered from the recent market sell-off, with its price-to-earnings ratio falling from about 42 times down to 36.5.

However, a number of the yield stocks have been relatively unscathed.

Pharmaceuticals distributor and veterinary company Ebos Group shares rose 0.9 per cent to $21.99, Genesis Energy gained 0.8 per cent to $2.50 and Meridian Energy was up 0.2 per cent at $3.25.

In a global sense, "the key thing you're seeing at the moment is you've had a decade of strength, effectively a build-up of tech around the globe," Scott said.

But now US interest rates are rising, the trade war between the US and China is a major concern and oil prices are tumbling.

"The re-pricing of the tech sector doesn't happen overnight." .

The trade war threat weighed heavily on tech stocks in the US overnight, with the Nasdaq down 3 per cent. That weighed on local growth stocks such as Pushpay, which extended its decline, falling 4.8 per cent to $3 on higher than average volume. Tourism Holdings, another growth stock, dropped 4.6 per cent to $4.60 on lighter volume than normal.

A2 Milk declined 1.2 per cent to $10.35 on a bigger volume than normal of 3.9 million shares. The milk marketing firm said revenue climbed 41 per cent in the first four months of the June 2019 financial year.

Argosy Property rose 1.8 per cent to $1.12 after reporting a 9.2 per cent increase in distributable income. Volumes were slightly lower than normal.

Other firms with more than one million shares traded included: Mercury NZ, unchanged at $3.45, Z Energy rose 0.5 per cent to $5.88, Spark New Zealand advanced 1.6 per cent to $4.19, SkyCity Entertainment Group fell 1.6 per cent to $3.61, and Contact Energy declined 0.3 per cent to $5.83.

New Zealand Refining was unchanged at $2.35 after saying it plans to raise up to $75m through a 15-year note offer.

Trustpower gained 0.5 per cent to $6.45 after signing a wholesale supply arrangement with Spark for wireless and mobile telecommunications services.

Outside the benchmark, Serko dropped 8.8 per cent to $3 on light volumes after reporting a decline in first-half profit as it spent more on research and development and hired more staff to support global expansion plans. The stock has soared 50 per cent so far this year as it embarks on a major global push.