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Regulation fears spill into currency markets

The New Zealand dollar fell and shares were flat as China’s regulatory crackdown continues to weigh on investors’ minds.

Wednesday, July 28th 2021, 6:59PM

by BusinessDesk

The S&P/NZX 50 Index fell 5 points, or less than 0.1%, to 12,595.32. Turnover was $202 million.

Financial markets are still being driven by fear of a regulatory crackdown on listed companies from the world’s second biggest economy.

China’s aggressive behaviour had mostly been affecting technology stocks but has begun to impact other assets.

“The regulatory crackdown in China has led to a sharp fall in risk appetite overnight, with equities, rates and commodity currencies all underperforming,” currency exchange OFX said in a note.

The New Zealand dollar was trading close to 70.00 US cents before falling to an intraday low of 69.40. By mid-afternoon, the kiwi dollar was trading at 69.63 US cents down from 69.95 cents yesterday.

The spillover from regulation fears weighed particularly hard on the kiwi and Australian dollars due to both countries having close economic links to China.

The trade-weighted index fell to 74.03 at 3pm, from 74.28 yesterday. The kiwi traded at 94.57 Australian cents from 94.77 cents, 76.49 yen from 77.12 yen, 58.90 euro cents from 59.26 cents, 50.15 British pence from 50.61 pence, and 4.5278 Chinese yuan from 4.5309 yuan.

New Zealand’s benchmark stock index was almost unchanged from yesterday, but the majority of stocks were weaker.

Tech stocks had some of the biggest losses, mirroring a fall on the US market overnight where the Nasdaq was down more than 2%.

“Investors are taking the opportunity to take some money off the table after a record-breaking run,” said BNZ’s Jason Wong.

Vista Group International led the decline as it fell 3% to $2.30, followed by Pushpay Holdings, down 2.2% at $1.75, and Serko which slipped 1.9% to $7.25.

On the other side of the board, fuel retailer Z Energy posted the biggest gain as it rose 3.2% to $2.93, followed by SkyCity Entertainment up 3.2% at $3.27. Both are more exposed to the domestic economy.

Outside of the top 50 index, TIL Logistics Group climbed another 6.1% to hit $1.39 – a record since May 2019. The stock has leaped some 40% this month after former Mainfreight executive director Chris Dunphy came on as a shareholder and executive director.

Yesterday it announced another former Mainfreight executive would join its board, and TIL said it would rebrand as Move Logistics. It will soon trade under the ticker MOV.

The logistics firm said it was on track to achieve earnings guidance that exceeds last years result of $57.4m.

Tags: Market Close

« a2 Milk drops another 4% on regulation riskMainfreight surges to $83 »

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AIA 4.55 ▲2.85 ▲3.25 3.55
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ANZ Blueprint to Build 1.68 - - -
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BNZ - Std, FlyBuys 4.55 3.15 3.22 3.85
BNZ - TotalMoney 4.55 - - -
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Kainga Ora - First Home Buyer Special - 2.25 - -
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Last updated: 16 September 2021 9:00am

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