Sharechat Logo

NZX50 falls below 3000

By Paul McBeth

Tuesday 7th October 2008

Text too small?
New Zealand’s benchmark NZX 50 Index fell below 3000 points for the first time since May 2005 amid concern global economic growth will falter as the credit crisis widens.

The NZX 50 fell 77.44 points, or 2.5%, to 2970.935, extending its decline this year to 24%. New Zealand shares followed stocks in Europe and the US lower after Germany led a rescue of Hypo Real Estate and BNP Paribas agreed to bail out Fortis, after earlier packages failed.

In the US, the Dow Jones Industrial Average fell below 10,000 for the first time in four years, while the Standard and Poor’s Energy Index had its steepest slump since the 9/11 terrorist attack in 2001.

“The fear factor for people is stemming back investments,” said Alan Moore, a fund manager who helps manage $260 million of kiwi stocks for Milford Asset Management.

The sell-off has slashed at least US$2.5 trillion from the value of global equities, according to a Bloomberg estimate. Stocks continued to slide after the US Congress approved a US$700 billion rescue package, amid concern it won’t be enough to stave off a global slump.

Fisher & Paykel Appliances fell 7.3% to NZ$1.52 on speculation waning growth will crimp household spending on items such as whiteware. Children’s clothing chain Pumpkin Patch fell 6.25% to $1.20, and food ingredients manufacturer Goodman Fielder dropped 5.9% to $1.60.

New Zealand Oil and Gas, whose revenue soared this year on output from its 12.5% owned Tui oilfield, declined as the price of crude oil fell as low as US$87.56 a barrel in New York. Oil dropped amid concern a global economic slowdown will erode demand for fuel.

Pike River Coal fell 5.6% to NZ$1.53 as the price of coal slipped. Power-station coal prices fell to US$121.17 a metric ton in the week ended October 3, according to Bloomberg.

Westpac and ANZ both dropped 3% on the NZX, in line with weakening financial stocks in Australia. Babcock & Brown tumbled 19% on the ASX today.

Moore said banking in Australasia is in “pretty good shape” and will probably perform better than in nations where the credit crisis is biting hardest, such as the US.

Bargain hunters are waiting to see if prices fall further, said Moore, because the “yields are attractive.” New Zealand companies are in a “relatively good condition,” he said. “The big question is whether the dividends are sustainable.”

Moore said the weakening New Zealand dollar will help underpin exporters. The currency fell as low as 61.70 US cents today.

“The New Zealand and Australian economies are in reasonably good shape in the global situation,” Moore said. He predicts the New Zealand market will not crash as badly as it did in 1987.

BusinessWire.co.nz

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

EROAD Limited (NZX: ERD) launches Clarity Solo Dashcam
22nd October 2021 Morning Report
Pictor ready to roll out game-changing COVID antibody test in New Zealand
Scott Technology Limited (NZX: SCT) Announces FY21 Results
21st October 2021 Morning Report
Greenfern Industries Limited (NZX: GFI) L&Q Notice
TruScreen Group Limited (NZX: TRU) Clinical Trial Results Highlight Efficacy of TRU Technology
20th October 2021 Morning Report
Freightways Limited (NZX: FRE) Acquisition of ProducePronto
19th October 2021 Morning Report