New Zealand shares fell in the first trading of 2019, led lower by Kathmandu Holdings, which was punished for posting weaker-than-expected Christmas sales. 

The S&P/NZX50 dropped 78.9 points, or 0.9 percent, to 8,732.37. Within the index, 38 stocks fell, six rose, and six were unchanged. Turnover was $85.6 million. 

Kathmandu sank 14 percent to $2.37, a six-month low, after saying trading fell short of management’s expectations through the Christmas period, with sales down 1 percent in the 22 weeks through Dec. 30 from a year earlier. Still, it managed to improve gross margins by 60 basis points to 64 percent, and said first-half profit will probably rise 4-to-8 percent. 

“Sales growth was below expectations, albeit margins were still pretty solid,” said Matt Goodson, managing director at Salt Funds Management. “This is a market where, if a company disappoints, it takes no prisoners.” 

Heartland Group remained under pressure, down 4.4 percent at $1.32, a new two-year low. The lender has been under pressure since the Reserve Bank said it will impose tougher capital requirements on licensed banks. New Zealand Refining fell 3.8 percent to $2.26 on twice its average volume, while Mercury NZ was down 3.7 percent at $3.51 on half its average volume. 

Large defensive stocks were among the few gainers on large volumes. Electricity generator-retailer Meridian Energy rose 0.4 percent to $3.42 on a volume of 1 million, while Precinct Properties New Zealand was up 0.3 percent at $1.485 on a volume of 1.2 million and Auckland International Airport increased 0.3 percent to $7.20 on a volume of 1.2 million. 

Kiwi Property Group was the most actively traded stock with a volume of 2.2 million, almost twice its 90-day average. It fell 1.8 percent to $1.34. Spark New Zealand decreased 0.2 percent to $4.14 on a volume of 1.5 million, half its average. 

Goodson said defensive stocks remained attractive in a volatile environment. There were sharp global currency movements after Apple Inc downgraded its earnings guidance, based in part on weakness in Chinese leading indicators.  

Fonterra Shareholders Fund units rose 0.2 percent to $4.65 after prices at the GlobalDairyTrade auction rose in the first event of 2019, on smaller supply. Fonterra Cooperative Group’s shares, which trade in a closed market for farmers, fell 0.6 percent to $4.64. 

Rival processor Synlait Milk was unchanged at $9, while milk marketing firm A2 Milk fell 1.4 percent to $11. 

Sky Network Television rose 2.7 percent to $1.90, the biggest gain on the day. 

Outside the benchmark index, Promisia Integrative was unchanged at 0.2 cents after the dietary supplements firm raised $1.35 million in a 3-for-1 rights issue. 

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