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Hot Topic NBR Focus: GMO
Hot Topic NBR Focus: GMO
1 mins to read

NZX drops to lowest level this year


NZX 50 drops below 3,300 points as global markets slump.

Niko Kloeten
Fri, 05 Aug 2011

The New Zealand stock exchange has fallen to its lowest level this year, dropping more than 2% after global exchanges fell overnight.

The NZX 50 has dropped 83.46 points to 3,294.319, a fall of 2.5% that brings it down to a level last seen in December last year.

Financial stocks have been hit hard, with AMP down 6.2% to $5.02 a share, ANZ down 4.4% to $24.00 and Westpac down 4.7% to $23.80.

Guinness Peat Group (down 5.8% to 65c), Goodman Fielder (down 5.2% to $1.09) and Kathmandu (down 4.8% to $2.17) have also had big declines.

The fall in the dollar hasn’t helped exporters avoid the drop, with Rakon down 4.3% to 89c, Fisher & Paykel Appliances down 4.2% to 57.5c and Fisher & Paykel Healthcare down 2% to $2.50.

Forsyth Barr analyst Guy Hallwright says the fall in the NZX is being driven by global forces but it's unsure how long it will last.

"If you look at the overseas exchanges the S & P 500 fell 4.8%, while the Australian stock exchange fell 3.6%. This is just a global re-assessment of risk and the fall is because of increasing investor caution."

He says the world economy looks to be heading towards a "prolonged period of low growth" but New Zealand is likely to fare better than many countries, as evidenced by the comparatively small drop in the NZX.

"Probably we don't have their public debt problem, although we do have high debt overall, and there's more stable demand for the commodities we export."

He says the fall in Australian-owned bank stocks is due to the slowdown in Australia's economy as well as concerns about risks to do with sovereign debt.

Mr Hallwright says the hardest-hit stocks have been those that had higher growth expectations, while companies such as The Warehouse, SkyCity, Sky TV and the listed property trusts have fallen less.

Niko Kloeten
Fri, 05 Aug 2011
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NZX drops to lowest level this year
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