SkyCity bucks down trend after solid result

Broker says jitters are based on US rates

New Zealand shares fell, rounding out a 3.7 per cent weekly decline as investors adjust to increased volatility and rising global bond yields that are undermining equity markets that have been at record highs. SkyCity Entertainment Group gained after kicking off the earnings season and Scales Corp fell.

The S&P/NZX 50 index dropped 84.77 points, or 1 per cent, to 8092.37. Within the index, 40 stocks declined, seven gained and three were unchanged. Turnover was $143 million.

Stocks across Asia followed Wall Street lower for another day as volatility reemerged in what’s been a whippy week of trading.

“People are coming around to this point that the jitters that we’re experiencing are for a good reason and that is growth in the world is looking better and therefore interest rates have the possibility of rising,” said Stu Williams, head of equities at Nikko Asset Management in Auckland.

“We’re just trying to figure out how it works with countries like the US, which is accelerating a bit faster and will most likely have shorter-term rates rise versus New Zealand and Australia where it’s not clear shorter term rates need to rise in this calendar year.”

Fruit exporter Scales led the benchmark index lower, falling 2.8 per cent to $4.48, followed by honey products maker Comvita

down 2.8 per cent to $8.75 and Chorus,

which declined 2.6 per cent to $3.825. Global logistics group Mainfreight fell 2.5 per cent.

SkyCity rose 0.5 per cent to $4.05 after reporting a 12 per cent gain in first-half profit on a recovery in its international business and said it was on track to deliver modest annual growth. Nikko’s Williams said the casino operator was largely tapped into the domestic market and said most companies reporting will be “a bit more of a New Zealand story”.

Among companies reporting on Monday, Contact Energy fell 0.4 per cent to $5.34 and Property For Industry gained 0.6 per cent to $1.64.

Outdoor equipment chain Kathmandu Holdings gained 1.3 per cent to $2.35, the biggest increase on the day.

Fletcher Building shares were still halted at $7.77 ahead of a briefing on Monday when it will update investors on further writedowns to major projects. Morningstar says it would be positive for Fletcher to sell the construction division, which the analyst values at $550 million, although it probably has to be at a discount.

Augusta Capital fell 1.9 per cent to $1.04 after buying the management contract for NPT, subject to shareholder approval. NPT fell 0.8 per cent to 59.5c.