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MARKET CLOSE: NZ shares fall as traders fear more volatility

MARKET CLOSE: NZ shares fall as investors fear more volatility; A2, Xero, Skycity decline

By Suze Metherell

Aug. 31 (BusinessDesk) - New Zealand shares fell as investors remained cautious after last week's spike in volatility when equity markets were sold off on fears over the Chinese economy. Dual-listed stocks, such as A2 Milk Co, Xero, Skycity Entertainment Group and Australia and New Zealand Banking Group declined.

The S&P/NZX 50 Index slipped 14.24 points, or 0.3 percent, to 5656.24. Within the index, 38 stocks fell, eight rose and four were unchanged. Turnover was a bigger than usual $249 million.

Traders are still nervous after last week's movements, which included the biggest one-day drop on the NZX 50 in four years, as an uncertain outlook for China's economy spooked investors and weighed on equities. Meanwhile, the possibility the US Federal Reserve will begin hiking rates next month was reiterated over the weekend by Fed vice chair Stanley Fischer at a central bankers’ conference at Jackson Hole, Wyoming, which reduces the attraction of dividend paying stocks which are common on New Zealand's market.

"We're still expecting a bit of volatility, I don't think we're through the volatility that we experienced from last week so investors have been pretty cautious," Grant Williamson, director at Hamilton Hindin Greene, said. "It has been on the radar for some time now, just when the Fed will raise interest rates, but it's still not 100 percent clear when that will be. It's a bit up in the air and obviously investors don't like the uncertainty."

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The S&P/ASX 200 Index declined 1.7 percent in afternoon trading, which added downward pressure on the local bourse, Williamson said.

Dual-listed stocks fell. A2 Milk, the milk marketing company, dropped 4.1 percent to 70 cents. Xero, the cloud-based accounting firm, retreated 2.5 percent to $13.90. SkyCity, the casino operator, fell 2 percent to $3.88. ANZ slid 1.9 percent to $30.91. Trade Me Group, the online auction site, declined 1.7 percent to $3.50.

Spark New Zealand was the best performer on the day, up 3.4 percent to a six-month high of $3.38. 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.

"Ever since their result which has surprised the market in terms of the quality of the result and the dividend payouts, so that stock's been the best performer on the market since they announced that result," Williamson said.

Pacific Edge, the biotech firm, led the benchmark index lower, down 5.3 percent to 54 cents.

Outside the benchmark index, earning season largely wrapped up, Pyne Gould Corp, which restated its 2014 accounts to remove an anticipated gain on the sale of Perpetual Trust, declined 3.5 percent to 28 cents after it said 2015 profit shrank by 99 percent to 38,000 British pounds as interest income fell, expenses jumped and the asset management firm didn't get a repeat of the previous year's one-time gain.

Tenon, whose locally produced wood mouldings are sold in the US, surged 18 percent to $2.35 after announced its first dividend in 17 years after it trebled annual profit to US$6 million, as a rebound in the US housing market and a decline in the kiwi dollar against the greenback boosted earnings. Rubicon, the forestry biotech company which owns two-thirds of Tenon, rose 13 percent to 34 cents.

Allied Farmers dropped 11 percent to 5.7 cents after it posted an 88 percent drop in annual profit to $128,000 after an overhaul of the business increased the firm's tax bill, and as its profitable livestock unit was held back by the slowing dairy sector.

On the New Zealand Alternative Index, Foley Family Wines, which is controlled by American billionaire Bill Foley, was unchanged at $1.44. It said full-year operating earnings more than doubled on increased sales of bottled wine in Australia and New Zealand, and a "modest" profit from a growing pool of bulk wine.


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