Tiwai Point threat continues to weigh on prices

New Zealand shares fell 2.5 per cent this week as the threat of the Tiwai Point smelter closure tripped up electricity companies and gave investors cause to ponder the slowing economy.

The S&P/NZX50 index decreased 42.88 points, or 0.4 per cent, to 10,788.64, and was down from 11,067.12 last week. Within the index, 26 stocks fell, 13 rose, and 11 were unchanged. Turnover was $110.8 million.

The electricity generator-retailers have been in focus this week after Rio Tinto warned that the future of the Tiwai Point smelter is under review.

Supplier Meridian Energy was down 2.8 per cent at $4.81 on a volume of 2.4 million shares, compared to its 90-day average of 1.5 million. Contact Energy declined 0.3 per cent to $7.67, with 1.3 million shares traded. Genesis Energy posted the day’s biggest gain, up 3.6 per cent at $3.20 on a volume of 840,000 shares, compared with its 562,000 average, and Trustpower decreased 0.1 per cent to $8.19.

“While [the smelter announcement] certainly had an impact on the generators and the retailers, it also speaks to the broader outlook for New Zealand,” said Michael McCarthy, chief market strategist at CMC Markets. “That’s why we saw some fairly dramatic reactions this week to the downside — that fall off to consumption in electricity does not say good things about overall economic activity.”

Fletcher Building fell 1.3 per cent to $4.60 on a volume of 2.4 million shares, while Mercury was up 0.6 per cent at $5.05 with 2.2 million shares changing hands.

Sky Network Television led the market lower, down 4.9 per cent at 98c on a volume of 213,000 shares, compared with its 90-day average of 1.2 million.

Gentrack fell 3.4 per cent to $5.12 on a typically small volume of 19,000 shares. The utilities software developer has significant operations in the UK, and has previously noted limited investment appetite among firms because of the Brexit ructions.

Port of Tauranga decreased 0.3 per cent to $6.46.

Synlait Milk slipped 0.1 per cent to $9.70 after it said it planned to buy dairy product processor Dairyworks for $112m. A2 Milk decreased 0.5 per cent to $12.74,

and Fonterra Shareholders’ Fund units rose 1 per cent to $4.14. Outside the benchmark index, Serko soared 29 per cent to $4.42 on a volume of 4.5 million shares.

The company raised $40m in a placement at $4.04 a share, which brought in booking.com operator Booking Holdings as an investor.

Scott Technologies fell 9.4 per cent to $2.23 after the company on Thursday reported a 20 per cent fall in annual profit.