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MARKET CLOSE: NZ shares mixed, A2 gains on growth

MARKET CLOSE: NZ shares mixed, A2 gains on growth while Xero falls

By Sophie Boot

Nov. 13 (BusinessDesk) - New Zealand shares were mixed, with A2 Milk rising on a positive presentation to investors while Xero and SkyCity Entertainment Group dropped.

The S&P/NZX50 Index rose 2 points, or 0.025 percent, to 7,976.43. Within the index, 19 stocks fell, 17 rose and 14 were unchanged. Turnover was $124 million.

A2 Milk was the best performer, up 3.9 percent to $7.70. The milk marketer signalled growth has continued into the current financial year at a UBS Investor Conference in Sydney today.

It outlined positive developments in its Australia and New Zealand, China and other Asian, US and UK markets, although stopped short of providing detailed figures, noting it would give an update at its annual meeting of shareholders on Nov. 21.

"It kicked off with a bit of a bang this morning, China growth is tracking really well so that was a positive for them," said Peter McIntyre, investment adviser at Craigs Investment Partners. "They reiterated they'll give a trading update at their AGM. We think potentially there's going to be an upgrade there based on the numbers they have provided. The market will really look forward to that update."

Meridian Energy rose 2.8 percent to $2.90 while Metro Performance Glass gained 2.2 percent to 92 cents.

At the other end of the scale, Xero was the worst performer, dropping 4.2 percent to $30.74. The stock has now fallen 11 percent in three sessions since the company announced its plans to delist from the NZX in favour of the ASX. McIntyre said many market participants were baffled by the decision, which means the stock will be sold by funds tracking the local index.

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"From the retail side it's slightly more difficult to hold the stock if it's just in Australia - you've also got currency to think about," McIntyre said. "It's also a stock that has done exceptionally well, so maybe there's a bit of profit-taking. Maybe some of the bigger institutions are putting their foot down and selling down, they've made some good gains and they're going to see how it starts off in Australia."

The dual-listed banks fell after giving up their final dividends. Westpac Banking Corp dropped 3.1 percent, or $1.14, to $35.77 after shedding a 94 cent dividend and Australia & New Zealand Banking Group dropped 3 percent, or 99 cents, to $32.62 after giving up an 80 cent dividend.

SkyCity Entertainment Group fell 0.8 percent to $3.90. It said group normalised revenue rose 1.7 percent in the four months ended Oct. 31 compared with the same period a year earlier, helped by a 3.1 percent gain from its New Zealand business. Based on the year-to-date performance, SkyCity remains on track to achieve modest growth in group earnings before interest, tax, depreciation and amortisation in the 2018 financial year.

Precinct Properties was unchanged at $1.285. It plans to raise up to $100 million from a seven-year bond offer to repay bank debt.

It is one of a number of property companies raising capital in an attempt to diversify their funding sources, McIntyre said, which may be an indication of the bottom of the interest rate cycle. In the past fortnight, Property For Industry has said it wants to raise $100 million through a new bond offer, while Heartland Bank and Auckland International Airport have also offered new bonds.

"Banks can be fair-weather friends so diversity of funding is really important to them," McIntyre said. "They have been able to tap the note or bond market in New Zealand quite actively, there's a lot of cash sitting on the sidelines for New Zealand."

Stride Property Group rose 0.6 percent to $1.64 and Investore Property was flat at $1.37. Stride has sold three Bunnings stores to Investore, the unit it carved out as a standalone property owner, for $78.5 million after renegotiating the terms of the leases.

Outside the benchmark index, Tower shares have been halted at 76 cents ahead of tomorrow's annual earnings announcement, where the general insurer will unveil details to raise new capital.


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