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Tower falls 19 per cent to hit 12-year low

NZ Newswire logoNZ Newswire 8/09/2016 Sophie Boot

New Zealand shares fell as several large cap stocks gave up dividend rights, while insurer Tower dropped to a 12-year low.

The S&P/NZX 50 Index dropped 36.39 points, or 0.5 per cent, to 7,534.72. Within the index, 29 stocks fell, 17 rose and four were unchanged. Turnover was X

Tower led the index lower, down 19 per cent to $1.11. The insurer warned it expects a $16.2 million hit to its after-tax profit due to increased claims provisions for the Canterbury earthquake following greater-than-expected new claims from the Earthquake Commission and increased litigation and customer disputes.

It also signalled it will review its dividend and its dividend policy at its full-year earnings result.

"One hopes it's at the end of it but it's down to the tail of difficult claims and the unknown extra over-cap claims from EQC," Matt Goodson, managing director at Salt Funds Management, said.

"Tower's gone from having an extraordinarily strong balance sheet to having a satisfactory balance sheet in terms of capital positioning."

Companies giving up rights to dividends included Air New Zealand, which dropped 10 cents, the same as its final dividend payout, to $2.06. It also paid a special 25 cent dividend.

Trade Me shed a 9 cent dividend and declined 22.4 cents to $5.62. Sky TV, which gave up a 15 cent dividend, fell 12 cents to $4.92.

Orion Health Group was the best performer, up 4 per cent to $4.20. It had fallen 24 per cent between June and the beginning of this month, from a peak of $5.31 to $4.03.

Freightways gained 2.2 per cent to $7.05, Kathmandu Holdings rose 2 per cent to $2.01, and Z Energy advanced 2 per cent to $8.60.

Outside the main index, Moa Group rose 5.9 per cent to 90 cents. The listed boutique brewer is to raise $4 million via a placement and rights offer at 73 cents per share, and will use the funds to expand its sales team and for working capital and expenses.

Smiths City Group was unchanged at 70 cents.

Pan Pacific Petroleum fell 6.3 per cent to 3 cents. It has applied for voluntary delisting from the NZX due to low trading volumes, though it will stay on the ASX.

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