New Zealand shares joined a selloff across Asia as the threat of US tariffs kept investors subdued, and a sluggish tourism outlook weighed on Auckland International Airport.
The S&P/NZX 50 index dropped 153 points, or 1.2%, to 12,880.36, with a turnover of $155.1 million across the main board.
Asian equity markets followed Europe lower as the latest utterances on potential US tariffs for the automotive, semiconductor and pharmaceutical sectors spooked investors, while Australian banks preparing for increased bad debts pushed the S&P/ASX 200 index down 1.3% in late trading.
Auckland airport fell 3.4% to $8.15 on a volume of 2.7 million shares after the country’s major gateway lifted underlying first-half profit 2% and declared a smaller interim dividend than analysts predicted of 6.25 cents per share.
Chief executive Carrie Hurihanganui noted the soft international market, acknowledging Air New Zealand’s fleet issues, and pointed out the national carrier’s dominance on regional routes undermined competitive offerings.
Meanwhile, Air New Zealand rose 0.8% to 63 cents after announcing a $100 million share buyback, while cutting its dividend to 1.25 cents as pretax earnings fell 16%.
The airline didn’t give annual earnings guidance, with as many as 11 aircraft to be grounded with engine issues.
“That’s not going to help Auckland airport if your carrier has 11 planes sitting on the ground,” said Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene. “International tourism is weaker despite the weak New Zealand dollar. Domestic is doing fine, but international is the thing for the likes of Auckland airport, which was the largest contributor to the fall today.”
The flightless bird
The kiwi dollar traded at 57.14 US cents at 5pm in Auckland from 57 cents at 7am and 57.18 cents yesterday.
SkyCity Entertainment Group led the NZX50 lower as it sank 7.5% to a three-month $1.35 on a volume of 4.4 million. The casino operator went for another period without declaring a dividend as profit was sapped by a settlement over South Australian gaming duty, and SkyCity cut annual earnings guidance on softer demand and increased transformation costs.
Hamilton Hindin Greene’s Sullivan said there were low expectations for the earnings season given the torpid economy through the end of the last year, but that there was a lack of green shoots emerging in companies’ outlooks.
Tourism Holdings declined 0.5% to $1.88 and travel software developer Serko was unchanged at $3.90. USX-listed Skyline Enterprises last traded at $15.35 earlier this month.
The Australian dual-listed lenders extended their declines as ANZ Group Holdings was the latest to take a grimmer assessment of the bad debts on its loan book, falling 4.1% to $32.29, while Westpac Banking Corp dropped 5% to $34.45. Heartland Group Holdings, which flagged increased charges on bad debts earlier this week, fell 2.2% to 91 cents. Fund manager FirstCape dropped below the 5% substantial shareholder threshold for Heartland on Wednesday.
Coming up trumps
Among local companies that have been pushed around by the tariff fluctuations, Steel & Tube Holdings dropped 4.7% to 82 cents, Skellerup Holdings declined 3.1% to $5.28 and Fisher & Paykel Healthcare decreased 1% to $35.05.
Precinct Properties New Zealand fell 2% to $1.215 after reporting largely unchanged adjusted funds from operations, and said its dividend ratio might exceed its target of 100% AFFO, as it affirmed annual guidance for 6.75 cents per stapled security to be paid to shareholders.
Vital Healthcare Property Trust decreased 0.8% to $1.85 after it reported a 9.5% decline in adjusted funds from operations, and affirmed its annual distribution guidance of 9.75 cents per unit.
The a2 Milk Co posted the biggest gain on the day, up 1.9% at $8.25, while Fonterra Shareholders’ Fund units advanced 0.4% to $5.11 and NZX increased 0.6% to $1.58.
Colonial Motor Co rose 1.7% to $6.49 on a small volume of almost 1,000 shares. The company yesterday reported a 24% decline in first-half trading profit, which wasn’t as bad as earlier feared, and declared an unchanged dividend of 15 cents per share.
Among companies that have attracted takeover interest this year, NZ Windfarms was unchanged at 22.5 cents, below the 25 cent offer price, while ikeGPS fell 7% to 80 cents – below the $1 valuation rejected by its board – and Millennium & Copthorne Hotels New Zealand was unchanged at $2.40, more than the $2.25 its minority shareholders have been offered.
On the junior Catalist bourse, student property investor Prime Campus has gone into the pre-close of its periodical auction at 64 cent price, up from 58 cents in its November trading event.
Reporting by Paul McBeth. Image from Pablo Heimplatz on Unsplash.