MARKET CLOSE: NZ shares fall in tech tumble led by Xero
MARKET CLOSE: NZ shares fall in tech driven tumble, Xero plunges
By Suze Metherell
April 8 (BusinessDesk) – New Zealand stocks fell for a second day, following Wall Street lower as a global tech sell off continued. Xero led the benchmark index lower, while Diligent Board Member Services, Wynyard Group, SLI Systems and GeoOp all fell.
The NZX 50 Index declined 44.284 points, or about 0.9 percent, to 5031.56. Within the index, 29 stocks fell, 10 rose and 11 were unchanged. Turnover was $126.9 million.
On Wall Street, the tech-heavy Nasdaq Composite fell for a third day as investors reduced exposure to companies such as Google, Apple and Yahoo. Local tech and growth stocks which had made gains at the start of the year fell as investors questioned whether their sales growth could deliver profits.
Xero plunged 12 percent to $31.50. The Wellington-based software company surged over 200 percent last year but has declined 30 percent in the past month to see Telecom overtake it by market cap at $4.6 billion compared to Xero’s $4 billion. Telecom fell 0.2 percent to $2.52.
Diligent, the governance app maker, fell 1.2 percent to $4.25. Tech stocks outside the benchmark index also fell. Wynyard, the security software firm, fell 7.6 percent to $2.45. SLI Systems, the online retail search engine designer, slid 3.9 percent to $1.95 and GeoOp, the small business task manager app, dropped 13 percent to $1.39.
“The main stocks to get sold off here are in the IT sector, which is very similar to what happened in the States last night but the real big mover has been Xero which has come under some pretty aggressive selling for a number of days now,” said Grant Williamson, director at Hamilton Hindin Greene. “There was certainly a little bit too much hype in those stocks and everybody wanted to jump on board.”
Pacific Edge, the bio-tech company which surged 109 percent in the past year, dropped 5.4 percent to $1.22. A2 Corp, the milk marketer which has gained 47 percent in the past 12 months, fell 1.2 percent to 84 cents. Ryman Healthcare, which rose 63 percent in the past year, slipped 0.7 percent to $8.33.
“Good news has really pushed those share prices above where they should have gone, probably driven by a little bit of investor hype,” Williamson said.
Chorus fell 1.4 percent to $1.765. The telecommunications network provider lost its appeal to the High Court over the Commerce Commission’s decision to slash pricing for access to its copper lines.
Steel & Tube rose 1 percent to $2.99. The steel manufacturer plans to buy the local division of India's Tata Steel Group for $27.5 million.
“That’s quite a reasonable sized purchase for Steel & Tube and it’s good to see them active on the acquisition trail to grow their overall business,” Williamson said.
Units in Fonterra Shareholders’ Fund fell 0.3 percent, or 2 cents, to $6.18 as it shed rights to its 5 cents per share interim dividend. The units give investors access to Fonterra Cooperative’s dividend stream.
Fletcher Building rose 0.4 percent to $9.48.
OceanaGold was the best performer rising 4.5 percent to $2.80.
Outside the NZX 50, retailer Postie Plus Group was unchanged at 9.5 cents after it met an extended deadline to post its first-half results, reporting a wider loss on supply chain disruptions and tough trading conditions for clothing retailers.