MARKET CLOSE NZ shares fall on Chorus dividend doubts; Air NZ selldown underway

New Zealand shares fell, led by Chorus, after the network company withdrew its guidance on paying dividends next year because of the uncertainty created by looming regulated prices and the government's possible response.

The NZX 50 Index fell 22.04 points, or 0.4 percent, to 4892.035. Within the index, 22 stocks fell, 18 rose and 10 were unchanged. Turnover was $105 million.

Chorus dropped 5.2 percent to $1.90 after the company withdrew its guidance of dividend payments of 25.5 cents a share for 2014 citing uncertainty over the price cuts, which it says would curtail its ability to fund the broadband build. The government is reviewing its own options, calling for an independent report, and may yet push back against the Commerce Commission's proposed price cuts.

The dividend announcement "was probably widely expected from the market, and still in anticipation of the government working through that process of looking for an independent report and pending what position the government takes," said Andrew Kelleher, a broker at ASB Securities.

He said the local market was weak given strong leads from Wall Street on Friday, when benchmark indexes closed at record highs. "Possibly people are making a little bit of room for the Air New Zealand shares."

The government has pitched the sale of 20 percent of Air New Zealand at a minimum $1.60 a share, compared to its closing price on Friday of $1.65.

Kelleher said the selldown should be well supported, with reasonable demand, and the sale removes an overhang from the government and will bolster the airline's index weighting.

Telecom gained 0.7 percent to $2.305 and Fletcher Building, the biggest company on the NZX 50, fell 0.7 percent to $9.46.

Sky Network Television fell 0.8 percent to $6.14 on turnover of $26.6 million, accounting for about a quarter of today's turnover.

Guinness Peat Group rose 0.8 percent to 60 cents on turnover of $14.6 million after the former investment vehicle of Ron Brierley said on Friday third-quarter sales at its Coats unit rose 7 percent, and that it's still waiting on the UK regulator to decide on what its British pension obligations will be.

Meridian Energy's instalment receipts fell 1.4 percent to $1.025 after the state-controlled power company reported a 22 percent fall in wholesale electricity prices, despite strong inflows of water into its South Island hydro-lakes in the September quarter. MightyRiverPower rose 0.2 percent to $2.135 and Contact Energy slipped 0.4 percent to $5.08.

TrustPower was unchanged at $6.65 after the power company won a tax dispute with the Inland Revenue Department over deductions claimed on feasibility costs for several renewable energy projects. Its controlling shareholder, Infratil, rose 0.4 percent to $2.41.

AWF Group climbed 7.4 percent to $2.90 after the company's shareholders approved buying white-collar recruitment firm Madison Group for as much as $36 million.

Tenon sank 8.5 percent to $1.30 after the wood mouldings maker said independent directors Michael Walls and Michael Andrews will be retiring at next month's annual meeting after 12 years on the board. The company will ask shareholders to approve the appointment of former Fletcher Challenge executive Mark Eglington as an independent director at the meeting. Controlling shareholder Rubicon fell 8.1 percent to 34 cents.

(BusinessDesk)