MARKET CLOSE: NZ shares mixed amid weak China manufacturing

MARKET CLOSE: NZ shares fall as weak China manufacturing spurs regional selloff; ANZ, Westpac, Chorus decline

By Suze Metherell

Sept. 1 (BusinessDesk) - New Zealand shares were mixed as shrinking manufacturing activity in China raised fears about the world's second-biggest economy, and spurred a selloff in equity markets across Asia-Pacific. Australia New Zealand Banking Group, Chorus and Westpac Banking Corp declined.

The S&P/NZX 50 Index slipped 1.26 points, or 0.02 percent, to 5654.98. Within the index, 19 stocks fell, 19 rose and 12 were unchanged. Turnover was $200 million.

A gauge of Chinese manufacturing activity showed industrial production shrank in August, spooking investors who are still nervous after last week's movements, which included the biggest one-day drop on the NZX 50 in four years. Across the Tasman, Australia's S&P/ASX 200 Index declined 1.2 percent in afternoon trading, China's Shanghai Composite Index fell 1.1 percent and Japan's Nikkei 225 Index dropped 1.5 percent.

"We're seeing another bumpy day out of Asia, China was down 3 or 4 percent at one stage and have since rallied back, so there is still a bit of anxiety about that," said Shane Solly, director at Harbour Asset Management. "But the New Zealand market is holding up pretty well versus weakness elsewhere."

Dual-listed stocks fell amid the volatility. ANZ declined 0.5 percent to $30.75. Westpac fell 0.4 percent to $34.27. Chorus, the telecommunications network builder, dropped 1.6 percent to $2.52.

"Sentiment has taken a bit of a hit and it takes time for people to absorb the change and we're going through that now," Solly said. "Markets will stay volatile for a little bit longer."

A2 Milk Co was unchanged at 70 cents. The milk marketing company said "no takeover offer is imminent" after US-based Dean Foods and Australian-based Freedom Foods stopped talking about their offer which was made in June. A2 today asked for its NZX traded shares to be halted pending an announcement shortly after the market opened, after its shares dropped 7.1 percent to 65 cents. Yesterday, ASX-listed Freedom Foods said it had "ceased detailed discussion in relation to A2" with Dean Foods, and is still reviewing its 18 percent holding in the firm, "including evaluating the benefits of maintaining a strategic stake".

"There was a little bit of noise about A2 Milk," Solly said. "It's fair to say the fact the offer has not been formally withdrawn muddies the water somewhat. It does create a bit of uncertainty."

Spark New Zealand fell 2.1 percent to $3.31, as investors looked to crystallise recent gains. The telecommunications company, formerly known as Telecom Corp, has gained some 22 percent since it signalled plans on Aug. 21 to pay bigger dividends as it starts chasing revenue growth for the first time in six years.

"It's not a surprise to see it hitting its peak," Solly said.

Pacific Edge led the benchmark index lower for a second day, down 3.7 percent to 52 cents. The biotech firm is the worst performer this year, down some 36 percent.

NZX, the stock market operator, dropped 2 percent to 98 cents, its lowest level since December 2011.

Summerset Group declined 2.6 percent to $3.75. The retirement village developer is the benchmark index's best performer this year, climbing some 36 percent.

Infratil, the infrastructure investment firm, was the best performer on the day, advancing 4.3 percent to $3.31.

Fletcher, the construction and building supplies firm, rose 1.1 percent to $7.28. Freightways, the logistics and courier firm, gained 2.7 percent to $5.39.

On the New Zealand Alternative Index, Just Water International was unchanged at 14 cents. The water cooler and supplies business, which is 79 percent owned by founder Tony Falkenstein, reported a 17 percent drop in annual profit to $1.1 million, as restructuring costs weighed on the bottom line.

Snakk Media rose 4.2 percent to 5 cents. Founder Derek Handley will step down as chairman of the mobile advertising technology company by the end of the year in a wider boardroom shuffle.

(BusinessDesk)

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