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MARKET CLOSE: NZ shares mixed, Fletcher keeps falling

MARKET CLOSE: NZ shares mixed, Fletcher keeps falling while Westpac, ANZ give up gains

By Sophie Boot

July 21 (BusinessDesk) - New Zealand shares were mixed, with Fletcher Building continuing yesterday's selling while Westpac Banking Corp and Australia & New Zealand Banking Group gave up gains.

The S&P/NZX50 Index dropped 1.6 points, or 0.02 percent, to 7,670.86. Within the index, 21 stocks rose, 18 fell and 11 were unchanged. Turnover was $222.8 million.

"We are getting pretty close to reporting season, which should give us a good idea of how companies are performing," said Grant Williamson, investment advisor at Hamilton Hindin Greene. "We may not see too much happening, investors might try to position themselves ahead of the results but most will wait."

Fletcher Building fell 1.5 percent to $7.48. The stock dropped 6.2 percent yesterday as the company slashed full-year earnings guidance and flagged an impairment against Australian assets, with chief executive Mark Adamson gone immediately.

The company's operating earnings in the year ended June 30 were about $525 million, down from $682 million in 2016 and below the $610 million-to-$650 million range the company gave in March, itself a 15 percent downgrade against earlier guidance because of problems with two major construction projects.

"There's lots of volume and interest in Fletcher still, after multiple downgrades investor confidence does wane quite a bit," Williamson said. "Investors will want to see the appointment of a quality chief executive, it will probably remain under pressure for a while yet."

Westpac Banking Corp led the index lower, down 2 percent to $34.60, while ANZ dropped 1.5 percent to $32.06. The dual-listed banks had gained strongly for the past two sessions after the Australian Prudential Regulation Authority (APRA) released its new "capital adequacy" targets, requiring a 150-basis-point increase in the minimum safety reserves that must be held by the big four banks there, less than what some observers feared.

"After that regulatory change we did see a huge rally but they've lost a little bit of ground today, which is again some profit taking," Williamson said.

A2 Milk Co fell 1.3 percent to $3.89 and Ebos Group dropped 1.2 percent to $18.

New Zealand Refining Co was the best performer, up 2.5 percent, and has gained 3.3 percent since its throughput and margin report for May and June was released on Tuesday. The oil processor said it achieved a gross refinery margin of USD 7.63 per barrel in the period, and got $58.4 million in processing fees, up from $43.3 million in the previous year.

CBL Corp rose 2.2 percent to $3.68 and Metlifecare advanced 1.8 percent to $5.60.


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