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Shares fall as UK vote creates uncertainty

NZ Newswire logoNZ Newswire 9/06/2017

New Zealand shares fell on Friday with turnover low as investors went into a holding pattern following the UK general election.

Comvita, Xero and Auckland International Airport all declined.

The S&P/NZX50 Index dropped 24.52 points, or 0.3 per cent, to 7436.1. Within the index, 28 stocks fell, 12 rose and 10 were unchanged. Turnover was $101.4 million.

The UK vote has delivered a hung parliament with Theresa May's Conservatives losing significant ground to Labour, led by Jeremy Corbyn, with no party able to reach the required votes for a majority.

Ms May called the snap election to give herself a greater mandate in negotiating Brexit, but Friday's result has been described as a clear indication of opposition from those who had voted to remain in the European Union.

As the incumbents, the Conservatives have the first right to form a government.

"The key question for markets is what does this mean for Brexit, and it's really very difficult to answer that at this time because there's no one party where Brexit would appear to have a mandate from this election," Matt Goodson, managing director at Salt Funds Management, said.

"The currency tells the story - the pound/USD has weakened from $1.2960-odd to about $1.2750, and then you look to companies with exposure to the UK - in New Zealand we've got Xero."

Xero dropped 3.4 per cent to $24.88.

Comvita was the worst performer, down 8.9 per cent to $5.20.

"There's more talk around the potential implication of myrtle rust and what it could mean for manuka and other native trees," Mr Goodson said.

New Zealand Refining dropped 2.8 per cent to $2.43, while Trustpower fell 2.1 per cent to $5.10.

Auckland International Airport declined 1.4 per cent to $7.10. First NZ Capital cut its 12-month target price for the stock to $5.10 from $5.20 on concern the company's major capital project to cope with growing demand will limit returns from the transport hub's regulated asset base.

Fletcher Building was the best performer, up 1.5 per cent to $7.66.

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