Mercury leads NZ shares lower

Mercury CEO Fraser Whineray. Photo / File

New Zealand shares fell in light trading, following the end of earnings season, as local investors followed overseas leads where markets were generally weaker. Mercury NZ led the market lower.

The S&P/NZX Index declined 13.8 points, or 0.1 per cent. to 9,399.69, having hit a record yesterday. Within the index, 24 stocks fell, 22 rose and four were unchanged. Turnover was $128.2 million, although just six companies traded on volumes of more than 1 million.

Equity markets across Asia were broadly weaker, with Australia's S&P/ASX Index down 0.2 per cent in late trading and South Korea's Kospi 200 Index falling 0.6 per cent. China's Shanghai Composite Index bucked the trend, up 0.1 per cent. Stocks on Wall Street fell overnight, with investors having factored in the outcome of a positive trade deal between the US and China. Fat Prophets anticipates there could be a mild sell-off in March.

Grant Williamson, a director at Hamilton Hindin Greene, said he "wouldn't rate the reporting period very highly - not even a five-out-of-ten - but the market's still up", referring to the just-completed corporate earnings season.

Mercury led the local market lower, falling 3.4 per cent to $3.67, on an unusually high volume of 6.1 million shares, almost 10-times its 90-day average. Mercury hit a record $3.80 yesterday, as investors rally around defensive stocks such as utilities that typically pay regular dividends.

Williamson said New Zealand's high dividend yields relative to other markets was the whole reason behind its strength.

No companies shed rights to their upcoming dividends today, although Goodman Property Trust and New Zealand Refining both go ex-dividend tomorrow. Goodman rose 0.9 per cent to $1.67 on a volume of 1.4 million, more than twice its three-monthly average, and NZ Refining fell 1 per cent to $2.03 on a volume 211,000, average activity in the refinery operator.

Spark New Zealand, which offers a dividend yield of 6.7 per cent, was the most traded stock with 7.1 million changing hands, more even than its usual 4.6 million volume. The shares fell 1.1 per cent to $3.715. Network operator Chorus was down 1.3 per cent at $5.35 on a slightly smaller volume than usual of 351,000.

Of other companies trading on volumes of more than 1 million, SkyCity Entertainment Group fell 0.5 per cent to $3.87, Meridian Energy declined 0.8 per cent to $3.78, and Kiwi Property Group was unchanged at $1.43.

Vista Group International climbed 5.9 per cent to a record $4.87 on a volume of 801,000, almost three times its average. The cinema software analytics firm is on an investor roadshow after reporting a strong earnings result and projecting its sixth year of 20 per cent-plus annual revenue growth in 2019.

NZX rose 2 per cent to $1.02 on a volume of 115,000, slightly less than usual. The stock market operator's monthly metrics for February showed more trading activity, albeit at a smaller value than the previous month.

Fonterra Shareholders' Fund units rose 1.2 per cent to $4.30 after Fitch Ratings put Fonterra on notice of a potential credit rating downgrade, saying the milk processor's asset sale programme is critical to reining in its debt. Separately, Fonterra confirmed Miles Hurrell as permanent chief executive, a role he's held on an interim basis for the past six months. The cooperative's shares, which can only be traded by its farmer-suppliers, also rose 1.2 per cent to $4.30.

Outside the benchmark index, Eroad gained 1.1 per cent to $2.75, taking its gain over the past three trading sessions to 31 per cent. The transport hardware and software developer signed up a major US customer on March 1.

Williamson said that's the first major customer for Eroad in the US, which the company has found a difficult market to crack.