NZX50 stumbles over smelter scare

Sky Network Television led the market lower. Photo / File

New Zealand shares fell 2.5 per cent this week as the threat of the Tiwai Point smelter closure tripped up electricity companies that had been on a tear, and gave investors cause to ponder the slowing economy.

The S&P/NZX 50 Index decreased 42.88 points, or 0.4 per cent, to 10,788.64, and was down from 11,067.12 last week. Within the index, 26 stocks fell, 13 rose, and 11 were unchanged. Turnover was $110.8 million.

The electricity generator-retailers have been in focus this week due to Rio Tinto warning that the future of the Tiwai Point smelter is under review.

Supplier Meridian Energy was down 2.8 per cent at $4.81 on a volume of 2.4 million shares, compared to its 90-day average of 1.5 million. Contact Energy declined 0.3 per cent to $7.67, with 1.3 million shares traded. Genesis Energy posted the day's biggest gain, up 3.6 per cent at $3.20 on a volume of 840,000 shares, compared to its 562,000 average, and Trustpower decreased 0.1 per cent to $8.19.

"We've had real information, particularly with electricity prices, and while that certainly had an impact on the generators and the retailers, it also speaks to the broader outlook for New Zealand," said Michael McCarthy, chief market strategist at CMC Markets.

"That's why we saw some fairly dramatic reactions this week to the downside - that fall off to consumption in electricity does not say good things about overall economic activity."

The upcoming MSCI index reweighting continued to drive trading in Fletcher Building and Mercury NZ, with speculation that the construction company will leave the index and the power company will join it. Fletcher fell 1.3 per cent to $4.60 on a volume of 2.4 million shares, while Mercury was up 0.6 per cent at $5.05 with 2.2 million shares changing hands.

Sky Network Television led the market lower, down 4.9 per cent at 98 cents on a volume of 213,000 shares, compared to its 90-day average of 1.2 million.

Gentrack fell 3.4 per cent to $5.12 on a typically small volume of 19,000 shares. The utilities software developer has significant operations in the UK, and has previously noted limited investment appetite among firms because of the Brexit ructions.

Port of Tauranga decreased 0.3 per cent to $6.46. The country's biggest export hub expects full-year earnings to remain strong, despite telling shareholders at today's annual meeting that first-quarter cargo volumes were weaker.

Synlait Milk slipped 0.1 per cent to $9.70 after it said it planned to buy dairy product processor Dairyworks for $112m. A2 Milk decreased 0.5 per cent to $12.74, and Fonterra Shareholders' Fund units rose 1 per cent to $4.14.

Outside the benchmark index, Serko soared 29 per cent to $4.42 on a volume of 4.5 million shares, more than 100 times its 37,000 average. The company raised $40m in a placement at $4.04 a share, which brought in booking.com operator Booking Holdings as an investor. Existing shareholders also sold into the placement.

Scott Technologies fell 9.4 per cent to $2.23 after the company yesterday reported a 20 per cent fall in annual profit, even as revenue grew. The company's cornerstone shareholder - JBS Australia - also reached a deal with the Overseas Investment Office over the influence of the meat firm's shareholders, Joesley and Wesley Batista. They do not meet New Zealand's good character test, having admitted to bribing officials in Brazil.

AWF Madison rose 2.2 per cent to $1.84 after it yesterday reported flat revenue and a 20 percent increase in earnings before interest, tax, depreciation and amortisation.

Wellington Drive Technologies fell 9 per cent to 17.3 cents after it said it plans to raise $5.3m in a one-for-five pro-rata rights issue at 10 cents a share to accelerate growth. The issue is 100 per cent committed with either underwrite agreements or pro-rata rights commitments, the company said.