Fund manager FirstCape has finally found something to buy after emerging on the scene a little over a year ago with a hungry appetite to go shopping, today signing a deal to acquire Consilium NZ.
Meanwhile, New Zealand’s S&P/NZX 50 index joined the selloff across Asia after Moody’s Ratings’ downgrade of the US economy from a triple-A rated economy and soft Chinese data gave traders a reason to cash in some of the recent gains.
The domestic shoulder earnings season continued today with Gentrack coming in short of expectations. Serko and Tower are due to report on Tuesday.
And finance minister Nicola Willis announced some tax changes to encourage foreign investment ahead of the big budget reveal later this week.
Weary eyes
The NZX50 fell 157.72 points, or 1.2%, to 12,629.07, with 30 stocks declining, 15 gaining and five unchanged. Turnover across the main board was $100.5 million.
Stock markets across Asia were relatively subdued after Moody’s Ratings last week cut the US economy’s credit rating to Aa1 from Aaa over the mounting deficits facing the world’s biggest economy.
Meanwhile, a sharp fall in Chinese industrial production and retail sales weighed on optimism about the health of the world’s second biggest economy, hitting Australia’s resources sector as mining companies weighed on the S&P/ASX 200 index, which was down 0.6% in late trading.
Japan’s Nikkei 225 index was down 0.7% and Hong Kong’s Hang Seng decreased 0.2%.
“The market’s been looking for something to hold onto and take a bit of profit,” said Peter McIntyre, an investment adviser at Craigs Investment Partners. “That’s going to drive markets overnight and set the tone for the week.”
Heavyweight exporter Fisher & Paykel Healthcare was a drag on the broader index as it fell 3.1% to $35.90, while The a2 Milk Co – which is closely tied to Chinese consumer sentiment – declined 3.5% to $8.82.
Slow-going
Fletcher Building fell 4.5% to $3.22. Forsyth Barr analysts today held their price target at $3.80 and kept their ‘neutral’ rating on the stock, saying the building materials firm’s update last week noted weak activity in non-residential and infrastructure work.
Vulcan Steel fell 3.5% to $7.62.
Warehouse Group led the benchmark index lower, falling 6.7% to 84 cents on relatively light volume of 54,000 shares.
Utilities software developer Gentrack declined 3.2% to $11.63 after its 5.1% increase in first-half earnings fell short of analysts’ expectations.
“Gentrack’s report this morning was a little underwhelming,” Craigs’ McIntyre said. “Being a high-multiple stock, we’ve seen that sold off a bit today.”
Other software firms were also weaker. Serko, which reports on Tuesday, declined 3% to $3.19 and Vista Group International decreased 1.4% to $3.60.
Insurer Tower, which also reports on Tuesday, slipped 0.7% to $1.44.
Fishing group Sanford posted the biggest gain on the day, up 3.4% at $5.41.
Outsourcing friends
Spark New Zealand was the most heavily traded stock with a volume of 3.7 million. It fell 1.1% to $2.185 after announcing a new partnership with Nokia to help outsource some of its network operations.
Manawa Energy slipped 0.8% to $6.31 after its independent adviser report valuation was below the acquisition price offered by Contact Energy, which itself was up 0.2% at $9.13.
Meanwhile, NZ Windfarms slipped 2.1% to 23.5 cents after its scheme meeting materials showed its independent valuation was also below the offer price from Meridian Energy, which gained 0.9% to $5.72.
NZX gained 0.7% to $1.53 on a bigger volume than normal of 1.6 million.
In merger and acquisition activity, FirstCape announced its long-awaited first acquisition, agreeing to buy the manager of the KiwiWRAP and Evidential KiwiSaver schemes, Consilium NZ for an undisclosed sum.
“This acquisition aligns with our strategic vision and strengthens our commitment to providing comprehensive wealth and asset management solutions for our clients,” FirstCape chief executive Malcolm Jackson said in a statement. “Both Consilium and FirstCape are focused on improving access to financial advice and growing KiwiSaver which were key drivers for the acquisition.”
And finance minister Nicola Willis made a pre-budget announcement signalling $75 million will be set aside over four years to encourage foreign investment in domestic infrastructure, tweaking thin capitalisation rules limiting tax-deductible debt and allowing deferral of tax liability of some employee share schemes.
