MARKET CLOSE: NZ shares fall in global sell-off; Xero, Westpac, Meridian decline

New Zealand shares fell in a global sell-off, paced by Xero, Westpac Banking Corp and Meridian Energy as falling oil and dairy prices and a hostage situation in Sydney weighed on investors.

The NZX 50 Index fell 15.882 points, or 0.3 percent, to 5499.072. Within the index, 25 stocks fell, 18 rose and seven were unchanged. Turnover was $110 million.

Last week, Wall Street recorded its worst weekly drop in three years amid heightened concern that the plunge in the price of oil might trigger an overall weakening in the global economy, while falling global dairy prices and continued weak demand from China for whole milk powder are looming over the domestic economy. Across the Tasman, the central business district of Sydney was shutdown as a gunman held a cafe hostage, sparking fears of a terror attack in New Zealand’s closest neighbour.

Stocks across Asia fell. Hong Kong’s Hang Seng Index dropped 1.3 percent in afternoon trading, while Japan’s Nikkei 225 Index fell 1 percent and Australia’s S&P/ASX 200 Index slipped 0.5 percent.

Xero, the cloud-based accounting firm, declined 2.9 percent to $16. Westpac Banking Corp, the dual-listed Australian bank, fell 1.2 percent to $33.80. Meridian, the partially-privatised energy company, slipped 1.1 percent to $1.77. A2 Milk Co, the milk marketing company, dropped 3.3 percent to 80 cents.

“The market is taking a lead from offshore stuff,” said James Lindsay, senior portfolio manager at Nikko Asset Management. “We started things out on the energy side of things with oil prices off and a number of the other commodities being weak over the last few weeks as well. You’ve seen in New Zealand the Fonterra payout cut and weak milk prices over the last few months, those things have weighed on the market.

“The Sydney situation is on investors’ minds as well,” Lindsay said.

Kathmandu Holdings, the outdoor good retailer which gets most of its income from Australia, led the benchmark lower falling 3.4 percent to $2.84. Across the Tasman consumer confidence is at a three-year low as retailers, particularly those in the rag-trade, struggle to maintain margins and lure shoppers back from cheap, online bargains.

“There has been some comment out of the Aussies from the retailers that this Christmas was looking a bit tough and that potentially the Christmas Day and Boxing Day sales would come earlier rather than later,” Lindsay said. “That’s a sign the sector is under pressure.”

Trade Me Group, the online auction house, fell 1.7 percent to $3.47. Warehouse Group, New Zealand’s largest listed retailer, rose 1 percent to $3.08. Outside the benchmark index, Hallenstein Glasson, the clothing chain, dropped 0.6 percent to $3.17. Pumpkin Patch, the unprofitable childrenswear retailer, was unchanged at 21 cents.

Kiwi Income Property Trust rose 0.8 percent to $1.245. At a special meeting a total of 99.9 percent of votes cast by its unit holders were in favour of turning the trust into a company, which is to be called Kiwi Property Group Ltd, completing a year-long transformation that saw the property trust taking management in house by buying out Commonwealth Bank of Australia.

Infratil rose 0.7 percent to $2.92. Fiji Airways announced direct flights between Fiji and Wellington International Airport, which the infrastructure investor owns two thirds of, starting mid-next year.

Fletcher Building, the construction and building supplies company, fell 0.6 percent to $8.05. Spark New Zealand, formerly Telecom Corp, declined 0.7 percent to $3.07.

On the New Zealand Alternative Index, Cooks Global Foods was unchanged at 13 cents. The international coffee chain franchisor widened its first-half loss to $1.2 million from $831,000 after buying the Canadian franchise rights to Esquires Coffee Houses, completing its ownership of the brand outside New Zealand and Australia, and spending more to expand its global footprint.

Pulse Energy dropped 13 percent to 7 cents after the electricity retailer, controlled by lines company Buller Electricity, reported a loss of $9.99 million in the six months ended Sept. 30, sinking deeper into the red as historical electricity derivatives tied the company to substantially higher than expected wholesale prices and chewed up revenue growth.

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