MARKET CLOSE: NZ shares drop on Australia view, Pumpkin Patch CEO leaves
July 30 (BusinessDesk) – New Zealand shares fell after the Australian central bank governor indicated he may cut rates to revive a flagging economy, driving up the kiwi dollar against its trans-Tasman counterpart and weighing on companies exposed to that economy.
The NZX 50 index fell 27.89 points, or 0.6 percent, to 4550.585. Within the index, 21 stocks fell, 17 rose and 12 were unchanged. Turnover was $84 million.
The kiwi dollar rose to a new five-year high against the Australian dollar after RBA governor Glenn Stevens said in a speech that the Australian dollar and rates could move lower. Companies including children’s clothing retailer Pumpkin Patch and clothing chain Hallenstein Glasson Holdings have warned that their Australian earnings are suffering from intense competition in the face of weaker demand.
Pumpkin Patch fell 3.2 percent to 90 cents after the company said chief executive Neil Cowie has resigned to take up a job with another retailer in New Zealand. The shares are down 31 percent this year. Hallenstein was unchanged at $4.75.
Among other companies exposed to the Australian economy, Ebos Group fell 2.8 percent to $10.17 and Fletcher Building declined 1.8 percent $8.16, even after figures showed New Zealand building consents were at a five-year high in the second quarter.
Westpac Banking Corp dropped 4.5 percent on the NZX to $35.35.
“The Australian economy is in danger of falling into recession,” said Greg Easton, an adviser at Craigs Investment Partners. “”Companies exposed to the Australian economy” have fallen today.
Adding to concerns, retail giant Woolworths revealed that it has faced price deflation even as overall sales have been rising, Easton said.
Telecom declined 2.2 percent to $2.245 and Chorus, the network company spun off from Telecom in 2011, dropped 2.8 percent to $2.74. Precinct Properties led some property investors lower, falling 1.9 percent to $1.02 and Contact Energy was 1.1 percent lower at $5.43.
Ryman Healthcare rose 0.6 percent to $7.12, just shy of its record-high, after saying first-quarter trading was in line with expectations and tracking ahead of the same period a year earlier. Rival retirement village operators Summerset gained 0.7 percent to $3.08 and Metlifecare fell 0.3 percent to $3.29.
Methven gained 5.4 percent to $1.77 after telling shareholders it expects profit growth this year, a day after announcing plans to buy a Chinese manufacturer supplier, Invention Sanitary.
Abano Healthcare was unchanged at $5.80 after reporting an 8 percent gain in annual earnings before interest, tax, depreciation and amortisation to $27.7 million, and a final dividend of 13.7 cents per share, taking the annual payout to 21 cents.
Argosy Property was unchanged at 96 cents after the property investor confirmed its $33.2 million acquisition of a Wellington property in the CBD, on which it plans to spend $46.6 million upgrading.