NZ stocks drop, A2 Milk falls ahead of legal challenge

Wednesday 27 July 2016 05:36 PM

MARKET CLOSE: NZ stocks drop, A2 Milk falls ahead of legal challenge, Fletcher Building gains

By Sophie Boot

July 27 (BusinessDesk) - New Zealand shares dipped for a second day in a row, led lower by A2 Milk Co and Steel & Tube Holdings while Fletcher Building rose on construction expectations.

The S&P/NZX 50 Index dropped 8.48 points, or 0.1 percent, to 7,301.91. Within the index, 25 stocks fell, 14 rose and 12 were unchanged. Turnover was $120 million.

A2 Milk Co was the worst performer on the index, down 3.1 percent to $1.90. It faces a legal challenge in Australia from rival Lion Group over the science behind health-related claims about the milk. A2 had taken Lion to court over its milk brand's use of A2 protein claims, seeking an injunction and damages. Media reports on the issue might have frightened some investors, David Price, a broker at Forsyth Barr, said.

The market was relatively quiet today ahead of August's results season, Price said, having had a strong run-up over the past month.

Steel & Tube Holdings dropped 2.2 percent to $2.18 and Trade Me Group fell 1.7 percent to $5.15.

Trustpower declined 1.2 percent to $8.10. The electricity generator and retailer said it is "very disappointed" with a Supreme Court ruling dismissing its bid to claim tax deductions on $17.7 million of project costs in a case closely watched by large-scale infrastructure developers.The company previously stated the cost of losing would cut profit by $6.6 million.

Ryman Healthcare dropped 0.9 percent to $9.65. Tthe country's biggest retirement village operator has bought a 4-hectare site in Auckland's Hobsonville for a $200 million development, marking its 10th village in New Zealand's largest city.

Fletcher Building rose 1.6 percent to $9.55, and has gained 28 percent this year.

"There were a couple of reports out overnight highlighting the increase in work they see this year, and going forward," Price said. "The government one was talking about an increase from $31 to $37 billion, quite a big percentage gain, so Fletcher has continued to run on the back of that."

Chorus gained 1.8 percent to $4.54 and Orion Health Group rose 1.3 percent to $4.81.

Outside the main index, Allied Farmers shares jumped 16 percent to 5.2 cents after the rural services firm gave a rosier view on annual earnings due to a better than expected performance from its livestock division.

Abano Healthcare gained 1.5 percent to $8.10. The Australasian radiology and dental centre operator turned to an annual profit after selling its half stake in audiology investor Bay International and expanding its dental chain.

"It was at the top end of guidance and there was a nice positive surprise on the dividend front so that stock had a better day, albeit on relatively light volume," Price said.

(BusinessDesk)

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