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NZX 50 drops to 4-month low

NZ Newswire logoNZ Newswire 4/11/2016 Jonathan Underhill

Trade Me, Fletcher Building and Metro Performance Glass led the decline © Dave Rowland/Getty Images Trade Me, Fletcher Building and Metro Performance Glass led the decline New Zealand shares fell, extending the S&P/NZX 50 Index's correction from a record high on Sept. 7 as investors fretted that valuations weren't supported by earnings growth.

Trade Me, Fletcher Building and Metro Performance Glass led the decline, while Abano Healthcare jumped after a takeover approach from a group of dissident shareholders.

The S&P/NZX 50 Index fell 70.47 points, or 1 per cent, to 6,708.47. Within the index, 36 stocks declined, 10 rose and five were unchanged. Turnover was $105 million.

Offshore investment in the NZ market reached a record high at the end of September, according to Forsyth Barr.

The index has now fallen 11.3 per cent from its all-time high of 7,571.10 on Sept. 7. A fall of 10 per cent or more is regarded as a correction.

Trade Me fell 3 per cent to $4.47 and Fletcher declined 2.8 per cent to $9.72. Tegel Group Holdings fell 2.7 per cent to $1.46 and MetroGlass dropped 2.4 per cent to $2.

David Price, a broker at Forsyth Barr, said the average price-to-earnings ratio for companies on the NZX 50 has retreated to about 18 times from a P/E "of 20-plus" but there hasn't been panic selling. The P/E has averaged 17 per cent in the past five years.

"We were bloody expensive and now we're just expensive," Price said.

SkyCity fell 2.4 per cent to $3.62 and Air New Zealand fell 1.6 per cent to $1.87.

Abano jumped 14 per cent to $9 after the group's dissident shareholders Anya and Peter Hutson and James Reeves are seeking control of the dental clinic and radiology operator in a partial takeover offer.

Spark NZ fell 1.4 per cent to $3.415 as the telephone company told shareholders at their annual meeting that it wants to steer customers away from Chorus's copper lines, which it said weren't as reliable for broadband services. Chorus gained 0.9 per cent to $3.57.

Gentrack Group rose 2.6 per cent to $3.50 after the utilities software developer said annual earnings rose 16 per cent, beating guidance and shrugging off the impact of a strong kiwi dollar dragging on its export receipts.

Stride Property fell 2.1 per cent to $1.84, the biggest decliner among property companies. Kiwi Property Group declined 1.7 per cent to $1.425 and Argosy Property fell 1.4 per cent to $1.045. Freightways dipped 1.4 per cent to $6.34.

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