MARKET CLOSE: NZ shares drop on Cyprus uncertainty
MARKET CLOSE: NZ shares drop on Cyprus uncertainty, Pumpkin Patch result
March 18 (BusinessDesk) – New Zealand shares fell as risk appetite worldwide was rattled by events in Cyprus and after retailer Pumpkin Patch said inventory disruptions and tough trading hurt sales in its first half.
The NZX 50 Index fell 46.031 points, or 1.1 percent, to 4341.024. Within the index, 34 stocks fell, nine rose and seven were unchanged. Turnover was $98 million.
Shares fell across the Asia-Pacific region amid concern an EU bailout plan for Cyprus that would clip Cypriot depositors’ funds could spark a run on banks in nearby nations. Japan’s Nikkei 225 Index was down 1.9 percent in early afternoon trading and Hong Kong’s Hang Seng fell 2.1 percent.
Fletcher Building, the biggest company on the NZX 50, fell 3.8 percent to $8.80. NZ Oil & Gas declined 3.4 percent to 86 cents and Chorus, the network company spun off from Telecom in 2011, fell 2.7 percent to $2.87.
A combination of influences, mostly from offshore, accounted for today’s slide, said Anthony Quirk, a director at Milford Asset Management.
Global investors were taking pause to assess the potential for the crisis in the tiny Eurozone economy of Cyprus to have flow-on effects, especially as people in other heavily indebted European nations absorbed the potential to be unable to access cash, as has occurred in Cyprus.
Milford remained “relatively positive” about the outlook for equities, despite the recent strong run-up in local share prices, Quirk said.
Pumpkin Patch fell 5.3 percent to $1.25. The retailer returned to profit in the first half with a net result of $4.7 million as costs to close underperforming stores in the US and UK a year earlier weren't repeated. Sales fell 5 percent to $153 million and the company had to contend with "pretty subdued" trading in its largest markets of Australia and New Zealand and late delivery of the company's summer inventory.
Xero, the cloud-based accounting service, fell 2.3 percent to $10.45 after founder Rod Drury said it is too early to look for a listing in the US as some commentators had speculated it would.
Shares may also have declined after Summerset Group announced that Quadrant Private Equity is ceding control of the retirement village operator, selling 18.6 percent of the company while retaining 37.2 percent. The shares last traded on Friday at $2.58 before being halted for the sale via UBS New Zealand.
“The Summerset deal might have taken some money of the market again,” Quirk said.
OceanaGold rose 5.1 percent to $3.33, leading gainers on the benchmark index. Among small caps, Pacific Edge fell 5.3 percent to 72 cents even after announcing that its facility in the US had gained certification.