NZ shares fall on Air NZ profit-taking

Photo / File

New Zealand shares fell, snapping a seven-day rally, as Air New Zealand was sold after recent gains and investors sold property companies such as Property for Industry, Goodman Property Trust and Kiwi Property Group on the view that rising interest rates makes their dividend yield less appealing.

The S&P/NZX 50 Index fell 16.65 points, or 0.2 per cent, to 7405.84. Within the index, 28 stocks fell, 16 gained and six were unchanged. Turnover was a larger-than-average $261 million.

Air New Zealand fell 3.5 per cent to $2.60, having climbed almost 6 per cent in the past two days after the national airline said it had tapped former Prime Minister John Key to join its board starting in September.

"We've seen some profit-taking in Air New Zealand. Investors love the idea that the ex-PM is joining the board," said Grant Williamson, a director at Hamilton Hindin Greene. "But one board member won't make a huge difference in the short term."

Property for Industry fell 2.5 per cent to $1.595, leading a clutch of property stocks lower. Goodman Property fell 2 per cent to $1.20 and Kiwi Property Group declined 1.4 per cent to $1.40. Vital Healthcare Property Trust shed 1.4 per cent to $2.20, Precinct Properties New Zealand declined 1.2 per cent to $1.205 and Argosy Property fell about 1 per cent to $1. Investore Property was down 0.8 per cent to $1.31 and Stride Property fell 0.6 per cent to $1.73.

"We've seen selling in the property stocks today as we did three or four weeks ago," Williamson said. "There's some large holders looking to make changes - some investors looking at the fundamentals: interest rates tracking up and what that means for yield stocks. Not quite so much demand."

While further selling was possible, there was "still a very good differential between interest rates and dividend yields," he said.

Among other stocks sensitive to perceptions in the property market, retirement village operator Ryman Healthcare fell 1.6 per cent to $8.65, Summerset Group Holdings dropped 1.4 per cent to $5.10 and Metlifecare fell 1.2 per cent to $5.69.

Sky Network Television fell 3.7 per cent to $3.66. Its proposed merger with Vodafone New Zealand was shot down by the Commerce Commission and today the regulator rejected a similar proposal from media companies NZME and Fairfax Media to merge their New Zealand operations.

NZME tumbled 11 per cent to 79 cents while on the ASX, Fairfax was down 1.6 per cent at A$1.0625.

Williamson said while media wasn't a sector he followed closely, "certainly the internet has taken a lot of the gloss off that industry."

Australia and New Zealand Banking Group fell 3.5 per cent to $33.86, tracking its ASX-listed shares lower after the company reported first-half results yesterday. Fletcher Building was unchanged at $8.48, with about $47m of stock changing hands.

Among gainers on the index today, a2 Milk extended its rally, rising about 3 per cent to $3.46 and its supplier, Synlait Milk, jumped 4.7 per cent to $3.98.

"The Chinese have really taken a shine to a2's baby formula. They can't get enough of it," Williamson said, adding that a2 was preparing to announce its dividend policy.

Scales Corp rose 2.1 per cent to $3.40 and Z Energy gained 1.7 percent to $7.73. New Zealand Refining rose 0.9 per cent to $2.35 after chief executive Sjoerd Post told the annual meeting in Auckland today the company is "cautiously optimistic about refinery margins in Asia Pacific and NZ demand."

Fonterra Shareholders' Fund rose 0.3 per cent to $5.92 after prices rose in the latest GlobalDairyTrade auction.

CBL Corp fell 0.3 percent to $3.47 after the Auckland-based credit surety and financial risk insurance firm said it expects to pick up new British customers wanting greater certainty from their insurance providers as the UK exits from the European Union.

Pyne Gould Corp fell 5.9 per cent to 32 cents after saying it will consider taking a case involving its Torchlight Fund No 1 LP unit to the Supreme Court after the Court of Appeal ordered it to pay a late payment fee of A$31.5 million to Wilaci.

G3 Group was unchanged at 64 cents after saying its British souvenir business faces a "significant profit downgrade" that has the NXT-listed mail operations and document manager's board trying to figure out ways to mitigate the decline.